Around the time Rob Hadick signed the paperwork to join Dragonfly Capital in April 2022, he’d also rented a house in the Hamptons. A contract with his former employer, hedge fund GoldenTree, obliged him to refrain from working for six months, so Hadick prepared to lean into forced leisure time in the country. His plans for a relaxed stay soon came undone.
His exile finally ended in November—just in time for a second crypto calamity in the form of FTX’s collapse. But Hadick never rethought his decision to go all in on crypto. “I was scared about what was happening to the industry,” he recently told Fortune from Dragonfly’s offices near New York City’s Union Square. “But I was excited about the opportunity we had, because we [still] had $500 million to deploy.”
That fund, Dragonfly’s third, ended up catapulting the firm into the upper echelon of the crypto venture world, competing with the likes of Andreessen Horowitz and Paradigm thanks to its prescient bets on now massive startups including Polymarket, Rain, and Ethena. Now, as crypto enters yet another winter, with token prices plummeting and excitement washed out by AI hype, Dragonfly is announcing its fourth fund, a $650 million vehicle.
The crypto venture ecosystem is going through a “mass extinction event,” as Hadick put it, but Dragonfly has thrived despite a founder breakup, a regulatory scare from the Department of Justice, and a pivot away from China amid a crypto crackdown. At the core of Dragonfly’s strategy are its four symbiotic leaders: Hadick, the fintech bridge; Haseeb Qureshi, the ambassador; Tom Schmidt, the DeFi whiz; and Bo Feng, the firm’s mysterious founder and an icon of the Chinese tech scene. “It’s bizarre to see us now become one of the incumbents,” said Qureshi. “We’re playing a bigger game than we were playing in the past.”
Qureshi started playing poker professionally at age 16, mostly sticking to online games because he wasn’t allowed in casinos. By the time he was 21, Qureshi had raked in almost $2 million, but he realized that he didn’t want to make the game his life. He made a bet with a friend that if he ever played another hand of professional poker, Qureshi would have to pay him $100,000. “That was my way of sealing off the decision for myself,” he told Fortune.
Today, Qureshi is arguably the public face of Dragonfly, thanks to his role on the popular Chopping Block podcast—the crypto version of All-In—and viral posts on Crypto Twitter about the failure of Web3 gaming or the efficacy of blockchain launches. But Qureshi didn’t start at Dragonfly until a few months after it began, joining in 2019 as the crypto industry was stuck in one of its regular prolonged downturns.
That early Dragonfly is unrecognizable from its current form. The firm began as a partnership between Alex Pack, a young VC leading crypto deals at Bain Capital Ventures, and Bo Feng, who had made his name as one of the top investors in China’s burgeoning internet ecosystem. Feng, who declined to be interviewed for this story, is reported to have connections to China’s political elite, forged in part by his marriage to a granddaughter of Deng Xiaoping, who came to power after Mao Zedong’s death.
Dragonfly built its reputation with investments in crypto companies like exchange Bybit and financial services firm Matrixport, as well as in other crypto venture firms as a fund of funds. According to Qureshi, when he came on board, he presented three conditions: He wanted to stop doing fund investments; he wanted to lead more deals; and he wanted to build out a technical team. “Bo basically said yes to all three,” Qureshi said. “In his words, he threw the car keys to me … and that was the birth of modern Dragonfly.” One of Qureshi’s first moves was to bring on Schmidt, then the head of product at a decentralized exchange called 0x, as a junior investor. (Schmidt quickly rose the ranks to general partner.)
The split between Pack, who went on to start his own venture firm, Hack VC, and Dragonfly is the stuff of crypto VC lore, though Qureshi downplays the drama. “It ultimately led to us just having totally different visions for what fund two and beyond was supposed to look like for Dragonfly,” he said. Pack told Fortune that his first fund with Feng was a “tremendous success,” but that he realized they were “very different culturally.”
“I spent a few months helping to hire and train my replacements, and then we parted ways,” he said. Schmidt used more colorful language to describe Pack, attributing the schism to personality.
Hadick’s arrival amid the existential collapse of FTX, however, catapulted Dragonfly to the next echelon—and solidified the firm’s identity.
When Hadick joined, Dragonfly began to make investments into the kinds of companies that now define the crypto landscape. One, Ethena, was building a synthetic dollar that generated yield through a complicated hedge-fund-like strategy on the back end. Though Ethena has since become one of the most prominent projects in the crowded field of stablecoins, when founder Guy Young pitched the idea to investors, most of them dismissed the idea as “insane,” as he put it. The skeptics cited the Terra Luna debacle, which nearly took down the entire crypto industry after the algorithmic-backed stablecoin failed to maintain a $1 peg. “It’s actually offensive that you’re even saying this after what just happened,” Young remembered investors telling him.
This was still the middle of the bear market of 2023, and Dragonfly jumped at the opportunity. “They were able to look at it from first principles,” Young said. The firm led Ethena’s $6 million seed round. Just over a year ago, Ethena raised a $100 million round, with investors including Franklin Templeton and Fidelity’s venture arm. Today, its flagship stablecoin has a market capitalization of around $6.3 billion.
The next year, Dragonfly backed the Series B funding round for Polymarket, which the firm had almost invested in years before. According to Qureshi, Dragonfly was nearly the first investor into Polymarket’s seed round back in 2020, when Shayne Coplan was striking out with most of the VCs he was pitching. “We really loved him,” Qureshi said, even though prediction markets hadn’t yet proved successful at the time. Polychain ended up offering a better term sheet, which Dragonfly decided not to match. “It was obviously a massive miss on our part, but we had the right idea,” Qureshi said.
“This is the biggest meta shift I can feel in my entire time in the industry,” Schmidt said, adding that investors are realizing there will be fewer native tokens for different crypto protocols, and more tokens that represent a real world asset like stocks and private credit funds. “A lot of crypto funds are now saying, ‘Hey, we’re fintech funds,’” Hadick said. “Which is what I think we do better than anybody.”
The increasing integration of blockchain and the finance industry raises uncomfortable questions of whether crypto is betraying its founding ideals, which saw Bitcoin as a rebellion against big banks and government control of the financial system.
“I do always try not to lose sight of the bigger picture, which is we made this digital internet money [go] from zero to a trillion dollars in 10 years,” said Schmidt. “The job is obviously not done, and if anything, when I look globally, I think that the need for this stuff is more in demand than ever.”
