CAYMAN ISLANDS Trends and Developments Contributed by: Simon Thomas, Richard Spencer, Alexandra Clynes and Sayak Bhattacharya, Campbells
start-ups. Cayman-based funds like Block - chain Capital and Multicoin Capital attracted SWF capital for digital asset ventures. Sectoral Investment Focus Technology: adjusted valuations drive opportunistic deployments Post-2023 valuation resets enabled Cayman funds to acquire stakes in: • Generative AI Platforms: USD1.3 billion was deployed across 14 Series B+ rounds, led by Tiger Global and Sequoia China. • Blockchain Infrastructure: Coming out of the crypto winter, USD900 million flowed into decentralized finance (DeFi) protocols. The rise of digital asset funds reflects the growing integration of blockchain technology in fund operations and investments. These funds tar - get blockchain-based projects and tokenised assets, offering opportunities for innovation and efficiency in the digital economy. Sustainable infrastructure: bridging the emerging markets gap Infrastructure investments remain a significant focus for private funds in the Cayman Islands. Venture capital firms are leveraging opportuni - ties in real estate and infrastructure develop - ment, particularly in emerging markets or regions undergoing modernisation. Challenges in the 2024 Ecosystem Exit market constraints The venture capital industry faced significant exit market constraints in 2024. These challenges stemmed from macroeconomic pressures, regu - latory hurdles, and structural market shifts. The 2024 exit environment saw the lowest activity in a decade, with the end of quarter 3 recording just USD10.4 billion in total exit value
and only 14 public listings. While full-year exit value reached USD149.2 billion, this was driven by small, early-stage exits (70% from compa - nies that had raised no further than Series A). Cayman-based funds, which often hold mature, high-value start-ups, faced disproportionate challenges due to the scarcity of large exits. Key constraints included: • Ageing Unicorns: 40% of unicorns in VC portfolios were held for 9+ years, creating a backlog of illiquid assets. • Concentration in Small Exits: 90% of exits involved Series B or earlier companies, gener - ating minimal returns for later-stage investors. The global IPO market is expected to rebound in 2025, providing liquidity events for VC-backed companies. Strategic Opportunities for 2025 A promising economic outlook and improved fundraising conditions have led to a resurgence in venture capital activity. Digital asset fund innovation The Cayman Islands has emerged as a lead - ing jurisdiction for digital asset venture capital (VC) funds in 2025, leveraging its innovative legal frameworks and tax-neutral environment to attract blockchain-focused investments, in particular tokenised VC fund structures where investor interests are represented by blockchain- based tokens, with smart contracts automating capital calls and distributions. 2025 has already seen increased VC activity in: • blockchain infrastructure projects (Layer 2 solutions, ZK-proof systems);
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