Exclusive: Escape Velocity raises a $62 million fund to bet on ‘DePIN’ crypto networks for telescopes, solar energy, and more

Escape Velocity closed a $61.74 million second fund in December to back DePIN and broader crypto startups, with marquee backers including Marc Andreessen, Micky Malka (Ribbit Capital) and a $15 million commitment from fund-of-funds Cendana. The firm — launched by former Goldman interns Mahesh Ramakrishnan and Salvador Gala after a $20 million debut fund in 2022 — has already backed DePIN plays including solar projects Daylight and Glow, and sees opportunity despite many DePIN tokens (e.g., Helium, Hivemapper) trading near all-time lows. Limited partners are on 10-year commitments, underscoring a patient, venture-style approach to a speculative infrastructure theme that remains unproven at mainstream scale.

Analysis

Market structure: Venture funds (Escape Velocity, Cendana LPs) and specialist DePIN founders are the primary near-term beneficiaries as fresh dry powder ($61.7m fund) sustains early-stage supply of projects while retail token holders of incumbent DePIN protocols (Helium HNT, Hivemapper HONEY) are the immediate losers given tokens near all-time lows. Competitive dynamics favor well-capitalized projects that can subsidize hardware deployment — pricing power shifts to projects that convert token incentives into recurring real-world revenue (target >$2/device/month); speculative token issuance exacerbates token supply and depresses prices.

Risk assessment: Tail risks include regulatory classification of DePIN tokens as securities (SEC action within 12–24 months), large-scale hardware recalls or security breaches, and rapid token inflation from retroactive airdrops which could destroy economics. Time horizons split: days–weeks expect continued downside volatility in DePIN tokens; 3–12 months funding rounds and partnerships will determine survivorship; 1–3 years needed for genuine network effects. Hidden dependencies: telco partnerships, consumer billing integrations, and hardware capex subsidies are gating factors. Key catalysts: a telco integration or a meaningful M&A exit (>2x current market cap) would re-rate the space.

Trade implications: Direct plays — establish small, conditioned exposure to quality DePIN tokens (HNT/HONEY) only if on-chain active-device growth >30% over 6 months and revenue/device >$1.5–$2; short tokens with >20% scheduled inflation next 12 months and flat device growth. Pair trade — long semiconductor/IoT hardware exposure (SOXX +2–4% tilt) vs short top-5 speculative DePIN tokens (-1–3% position) to capture rotation into durable hardware demand. Options — buy 3-month put spreads on a crypto-equity hedge (COIN 10% OTM put / sell 30% OTM put) to cap cost while protecting against a broader rerate.

Contrarian view: Consensus underestimates that real-world revenue capture (subscriptions, telco resale) can create sustainable cashflows irrespective of token price — projects that monetize services in fiat could be mispriced by >50% vs token market caps. Reaction may be overdone for protocols with transparent, low-inflation tokenomics and measurable on-chain usage; historical parallels include early MVNO rollouts where hardware subsidies preceded mass adoption. Unintended consequence: flood of VC capital can increase token dilution and accelerate a doom loop for retail holders; require concrete KPI improvements before committing incremental capital.

Key Decisions for Investors

• Establish a conditional 1–2% portfolio long in selective DePIN tokens (target HNT and HONEY) only if on-chain active devices grow >30% over 6 months AND average fiat-equivalent revenue/device ≥ $1.5/month; exit if either metric is missed or token inflation >20% annualizes.
• Allocate 2–4% overweight to semiconductor/IoT hardware exposure via SOXX or direct names (chipmakers and LPWA radio vendors) to capture durable demand from DePIN deployments; tranche in over 3 months, raise stop-loss to protect capital at -12%.
• Initiate 1–3% short positions (or buy put protection) on top 3 speculative DePIN tokens that have >20% scheduled token issuance in next 12 months and declining device growth; size per position 0.5–1% notional, reassess monthly.
• Purchase a 3-month put spread as portfolio insurance on crypto-equities: buy 10% OTM put and sell 30% OTM put on COIN (or equivalent) sized to hedge 30–50% of crypto-exposure; roll or unwind on any 30% rally in those equities.
• Pursue LP-secondary or GP-led exposure to Escape Velocity only if offered at >10% discount to NAV and with transparency on carry and capital call cadence; prioritize structures with downside protection or liquidation preference.