Investors Jumping Into Web3 Find the Rules Are Not So Simple

Singapore-based Morrison Foerster Funds Partner Jason Nelms is quoted in a recent article, “Investors jumping into Web3 find the rules are not so simple”, published by The Business Times.

The article explores how growing interest in Web3 has resulted in both talent and significant funding flowing into the sector and is requiring changes to the usual rules of investing.

Over the past two years, Morrison Foerster has observed that partnership agreements for most new funds now expressly allow a fund to invest into tokens and other digital assets. Jason comments, “Some limited partners are still unsure of this strategy, so it is common for a general partner to agree to limit these types of investments to under 10 or 20 per cent of the fund’s total portfolio in order to ensure that the fund’s exposure will not be too concentrated in this area.”

He adds, “For most funds formed more than three years ago, partnership agreements do not mention Web3 investments because the term was not popularized then. Fund managers either decide that they are permitted to make these new types of investments as part of the usual VC strategy, or ask their investors for consent.”

Read the full article (subscription required).