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These two VCs were hobby Bitcoin miners a decade ago, and now they've raised $110 million for a second fund focused on cryptocurrencies and blockchain startups

* On Monday, venture firm Electric Capital announced that it had raised a $110 million fund focused on crypto technologies. * The firm plans to invest in cryptocurrencies, blockchain-based businesses, fintech companies, and marketplaces. * Avichal Garg and Curtis Spencer, Electric Capital's co-founders, said that their investments could reshape legacy banks, emerging markets, and even social networks.  * Visit Business Insider's homepage for more stories. In 2010, when Bitcoin seemed like just another tech fad or pipe dream, Avichal Garg and Curtis Spencer started mining for the cryptocurrency as a hobby. Garg and Spencer spent those early crypto days working together at Spool, the software startup that they co-founded and that was acquired by Facebook in 2012.  But even as the traditional software sphere still beckoned, the two never strayed too far from the crypto world. By the time 2017 came around, Garg and Spencer were angel investors in a handful of cryptocurrencies and blockchain startups. By 2018, they had formalized their investments by launching Electric Capital, an early-stage venture firm that invests in cryptocurrencies, blockchains, marketplaces, and fintech startups, as well as non-crypto startups, like Cruise and Notion.  On Monday, Electric Capital announced that it had just raised $110 million for its second fund, making the firm one of the few (along with Andreessen Horowitz) to have a fund earmarked for cryptocurrencies and startups working with blockchain technology. They plan to invest in cryptocurrencies like Bitcoin, as well as blockchain-based businesses, fintech companies, and marketplaces. Celo, NEAR Protocol, and Bitwise are among the firm's recent investments.  Garg and Spencer said that they couldn't reveal the names of their investors, but they said the new fund has garnered significant support from university endowments and nonprofits. As legacy banks look to revamp their traditional systems, VCs are placing bets on which fintech startups will help to usher in a new era of payments and banking. In a Zoom interview with Business Insider, Garg and Spencer said they hope that their investments will help reshape the ways in which money is stored and exchanged. Legacy banks like JP Morgan are thinking about rebuilding their 50-year-old systems with the 2020's hottest technology, Garg said. Spencer said he believes that the use of cryptocurrencies and blockchain technology could make it easier to send money to emerging markets, including countries like Nigeria and Mexico.  People should also expect to see the rise of companies like CryptoKitties, a blockchain game that raised $12 million from VC firms like Andreessen Horowitz in 2018, Garg and Spencer said.  Cryptocurrencies and blockchain technology have grabbed the attention of big tech companies, Spencer added. Currently, Garg and Spencers' former employer, Facebook, is attempting to obtain regulatory approval for Libra, a blockchain digital currency and network that's still in its primitive stages, and has faced significant pushback from regulators and lawmakers, as The Informaton reported.  While Garg and Spencer say they believe cryptocurrencies and blockchain technologies will reshape fintech and marketplaces, they also said that the technology could impact other sectors.  "Eventually, it will get to things like social media," Garg added.  Garg and Spencer said that they are optimistic about the future of cryptocurrencies and blockchains, but the jury's still out on how different countries plan to regulate digital currencies.  In recent years, the federal government has been stepping up its monitoring of cryptocurrencies and initial coin offerings. A number of federal agencies, including the SEC, FTC, and IRS, are in charge of regulating blockchains and cryptocurrencies. The federal government has allowed individual states to introduce their own blockchain-related legislation.  Some countries, including China, Russia, and Colombia, have banned Bitcoin and other cryptocurrencies, and India is reportedly considering a ban on cryptocurrencies as well. SEE ALSO: A former Apple TV designer built a livestreaming startup to challenge Twitch, and he's betting the key to winning will be live rap battles SEE ALSO: The latest class of successful young fintech investors reveals how to land a job in the notoriously exclusive field Join the conversation about this story » NOW WATCH: Here's what it's like to travel during the coronavirus outbreak
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