The Lehman Brothers–style collapse of crypto exchange FTX is shaping up to be a major embarrassment for the venture investors who backed it. Already it’s left one VC fund in shambles: FTX’s own venture investing arm, FTX Ventures.
In fact, at least one startup that received an investment from the 10-month fund has taken advantage of FTX’s reversal of fortunes to buy back its stake, I’ve learned. It’s a rare move and one that speaks to how both investors and founders are ducking shrapnel from the FTX blowup. (For more on the widening fallout, read my scoop on how Sequoia, Paradigm and others raised more than $500 million in cash from FTX founder Sam Bankman-Fried’s entities.)
