A Venture Fund With Plenty of Virtual Capital, but No Capitalist

Olivier Stern, a 31-year-old French socialist with an appetite for risk, recently invested a third of his life savings — 10,000 euros, about $11,000 — in a cryptocurrency start-up that has no legal standing and runs head-on into regulatory obstacles, yet might very well upend the mysterious world of virtual investing.

The start-up, a sort of venture capital fund that calls itself the Decentralized Autonomous Organization, has essentially come out of nowhere in the last month and attracted about $152 million, at last count, from investors around the world like Mr. Stern — making it the most successful crowdfunded venture ever, by a significant margin.

The venture, like so many things related to the digital currencies that cryptographers are creating on the Internet, is difficult to describe, and it may not be legal. But thousands of mostly anonymous investors have already heard about it through word of mouth and sent money — in the form of Ether, a freshly coded form of currency that has held itself out as a new and improved version of Bitcoin, the most popular virtual scrip.

For these investors, in some sense it is the digital equivalent of buying into a bakery with no baker, no menu and no assurance that the ovens will even be delivered. But among the crowd that has invested, faith in the computer code that governs the project appears strong enough to override all those concerns.

After it collects Ether from investors — the deadline to buy in is May 28 — the D.A.O. aims to put the money into other digital currency start-ups. The investing decisions are to be made through online polling of shareholders like Mr. Stern, who has a day job dealing with parking policy in the town of Montreuil, just outside Paris.

“I think it is the beginning of something that could, in a way, make history,” said Mr. Stern, who previously lost a small sum of money he invested in Bitcoin when a major Bitcoin exchange — Mt. Gox — went bust. “Maybe it can fail, maybe it can succeed, but for sure it is an idea that is very interesting.”

The rise of the new venture comes at a time when the technology underlying virtual currencies is rapidly being embraced by the mainstream: Most Wall Street firms and many central banks are experimenting with the blockchain, the online ledger system that Bitcoin and Ether pioneered. Banks hope the blockchain, or something like it, can provide a faster, cheaper way of conducting transactions and storing data.

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