Members of Andreessen Horowitz Invest in a Cryptocurrency Hedge Fund Worth 250 Million Dollars

Multicoin Capital, a US-based company dedicated to the management of digital and traditional assets, managed to raise a substantial investment capital for the constitution of its cryptocurrency hedge fund. This was made possible thanks to the participation of various institutional and individual investors from the stock market.

Some of the investors that took part in this project are Marc Andreessen, the co-founder of Netscape Communications Corporation, David Sacks, the first operations director of PayPal Holdings, Elad Gil, the co-founder of Color Genomics, a company dedicated to genomics experiments, Chris Dixon, a general partner at Andreessen Horowitz and Bill Lee, a member of Craft Ventures.

Multicoin Capital is trying to raise a total of 250 million US dollars to launch its hedge fund based on cryptocurrencies. At the moment, the company managed to raise 50 million dollars, which shows great interest expressed by the investors for the cryptocurrency world.

Kyle Samani, the co-founder of Multicoin Capital, said in a statement to Reuters that the company was looking at the cryptocurrencies as a long-term investment, which could extend from three to fours years, a much longer time than the investors expected only a few months ago. Samani said: “We’re very fortunate to have some of the most well-known investors in New York City and Silicon Valley investing with us. The past six months have been absolutely incredible. Since launch, there’s been a torrent of interest in Multicoin Capital, validating the overwhelming need for professional fund managers that understand the market intimately. Today there are more than 200 crypto hedge funds in the mix. We stand out by simply doing what other investors like Buffet and Graham did in the stock market. We seek to build a brand and a reputation that accurately mirrors the intellectual rigor we put into each and every position we take.

The network of Multicoin Capital has seven different types of investment strategies with combined assets ranging from 3.5 billion dollars to 5 billion dollars. Similarly, the fund will use cryptographic technology to protect the investments of its clients.

The hedge funds, also known as alternative investment instruments or free investment funds, are known to be a financial instruments that are used to protect investments from sharp movements of the market, by using loans of assets or securities in a conditional manner. These characteristics make the hedge funds ideal for cryptocurrency investments, as pointed out by the founders of Multicoin Capital. The company’s investment thesis is the following: “Blockchains will impact trillions of dollars of economic activity across many industries globally. Cryptoassets have fixed supplies; therefore increases in demand drive up prices. Diversified funds are the most effective way to manage exposure to this volatile, rapidly evolving asset class.”

All these characteristics confirm it is becoming increasingly common that partners and venture capital investors recur to the cryptocurrency finds, since the majority of traditional venture capital companies have agreements with their investors that prevent them for investing in high risk assets such as the digital currencies.

In this case, Samani points out that even though there are many similarities between the traditional and digital investments, the differences are big. For example, the cryptocurrencies are regaining liquidity much faster than the traditional assets. According to Samani, this is one characteristic that should be taken into account when it comes to investing in cryptocurrencies. Samani also added: “Most obviously, crypto assets become liquid much sooner in their life cycles than traditional private equity. In addition to liquidity, everything in crypto is open source, which requires thinking about investing in a fundamentally different way.”

Besides Multicoin Capital and its hedge fund, the funds specialized in cryptocurrencies are having an important boom on the stock market. The US Securities and Exchange Commission (SEC) received a lot of emblematic requests for launching hedge funds based on cryptocurrencies, but these requests have been denied until further notice.

However, other initiatives had considerable success and generated a stir in the blockchain ecosystem, such as Coinbase Index Fund. This platform provides investors with a total exposure to all the digital assets listed on Coinbase cryptocurrency exchange, also known as GDAX.

The index funds are markets with diversified exposure before a large and varied group of financial assets. In this way, the investors can keep a complete track of the performance of a particular class of assets, instead of annexing each asset individually.

The fund launched by Coinbase is base on the blockchain technology, allowing the investors to make movements on the market protected by this technology. The company is planning to be available at some point to all accredited investors residing in the United States of America.

Likewise, Coinbase is planning to launch more funds specialized in the digital assets. It is a project that, backed up by the confidence provided by Coinbase by years of work in the blockchain ecosystem, could have an important rise in the financial sector.

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