Gone is the time when investing in a bitcoin company was enough to make you cool.

Now, the really hip kids are into initial coin offerings, or ICOs, sales of cryptographically scarce data that offer the promise to raise millions of dollars in minutes, often with little more than a white paper and pictures of their technical team. In the first five months of this year alone, $136m has been raised in 37 token sales, according to ICO data firm Smith + Crown.

But these two worlds are colliding as some leading blockchain VCs show an increasing willingness to participate in the funding mechanism, even if the exploding price of their corresponding cryptocurrencies brings new variables into the age-old investment equation.

In conversation with CoinDesk, several leading investors in startups working with bitcoin, ethereum and other tokenized assets almost universally agreed that the explosion in cryptocurrency values has led to even more opportunity, not less, for their existing investment model.

Seeking resources beyond just capital, these crypto-startups are increasingly coming to venture capitalists in search of veteran partners and experience.

The result is not only more investment opportunities for traditional VCs, but changes to the firms' overall strategies ranging from a complete rethinking of how they serve startups to a doubling-down of existing practices.

Perhaps the most conservative of those polled, Union Square Ventures partner Albert Wenger, described the changing investment landscape to CoinDesk:

An early investor in firms such as Coinbase, OpenBazaar, Blockstack and Polychain Capital, Wenger has already helped his New York firm grow from one of the earliest traditional investors in bitcoin to an industry mainstay.

Going forward, though, Wenger said USV plans to continue investing "at a steady pace" in spite of the growing popularity of ICOs – a decision placing him largely in alignment with several other investors.

One such investor is Brock Pierce, co-founder of San Francisco-based Blockchain Capital, who was among several VCs who also confirmed he has seen an "accelerated" rate of firms entering his company's pipeline as a result of increasing attention from rising cryptocurrency prices.

In fact, Blockchain Capital and USV portfolio company Polychain Capital are both examples of one of the new ways VCs are experimenting with the ICO model, having both participated as early investors in the 0x token sale by buying in early at a 30% discounted rate.

Similarly, the co-founder of Menlo Park-based DFJ, Tim Draper, earlier this week participated in another hybrid investment round, this time in Tezos, by agreeing to participate in its ICO.

Pushing the concept of hybrid investments even further, Blockchain Capital’s Pierce showed another way VCs are working with ICOs when he made headlines by announcing that his firm had raised $10m in an ICO comprised of tokens designed to comply with securities regulations.

Beneath these changes, though, Pierce's investment strategy stayed the same.

With existing investments that already include Abra, Blockstream, BTCC, Ripple and Xapo, Pierce described why he believes the cryptocurrency price increase will likely only have minimal impact on his strategy.

"If anything, our risk appetite tends to be counter-cyclical to crypto prices in that we like to deploy capital in times when other investors are nervous," said Pierce. "And, conversely, we tend to be more skeptical when unbounded enthusiasm sets in and valuations get stretched."

Also experiencing an uptick in startups looking to raise capital is Digital Currency Group (DCG), the New York-based investment firm behind startups such as Axoni, BTCC, Coinbase and Kraken.

DCG investing associate Travis Scher reported that the increased popularity of cryptocurrencies has led to what he termed a "modest but not significant increase" in VCs backing digital currency firms.

But he cautioned that the increased popularity has its limits, adding that the "run-up won’t last forever," even if he believes it validates his company's strategy.

Scher said that, while most VCs still don't know which type of blockchain companies to invest in, they are increasingly becoming "believers in the technology" and are looking for new ways to get involved.

He said:

The co-founder of Boost VC, Brayton Williams, explained the colliding worlds of venture capital and ICOs a different way. While other investors' strategies may stay largely the same, he reported that his is evolving in response to the changing landscape.

In conversation with CoinDesk, Williams compared the current increased interest to the 2013 bitcoin rally that helped contribute to the venture capital community investing in bitcoin companies, but not necessarily in bitcoin itself.

An early investor in Veem (formerly Align Commerce), Blockcypher, Ripio and others, Williams said that, this time around, that trend has continued and "a large disconnect" exists between firms willing to invest in cryptocurrency startups and those willing to invest cryptocurrencies.

Williams lists his own firm, along with USV, Blockchain Capital and Pantera, as among those who have been more quick to invest directly in tokens.

To demonstrate his point, Williams said he’s currently in conversations with multiple entrepreneurs looking to take advantage of the access to capital provided by ICOs. In exchange for early access, Williams said potential portfolio companies would receive help building a team and developing a strategy leading up to the token sale.

He concluded:

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has ownership stakes in Abra, Axoni, Blockstream, Blockstack, BTCC, Coinbase, Kraken, Ripio, Ripple, Xapo and Veem.

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