U.S. investment firm with long-term view launches two crypto-currency funds

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NEW YORK (Reuters) – Multicoin Capital, a U.S. investment firm with a multi-year horizon, said on Thursday it has launched two funds that will invest in digital currencies or tokens, as it seeks to tap robust demand for virtual assets that allow for instant, borderless transactions.

Both funds have a combined $10 million in assets, with a target of $100 million, Kyle Samani, Multicoin’s managing partner said in an interview with Reuters. Samani expects the firm to hit that goal in the first quarter of 2018.

Multicoin has an long-term investment view, typically three to four years, said managing partner Tushar Jain. That’s far longer than the typical horizon of digital currency funds of just a few months.

“We’ll adjust the percentage of the portfolio during that time. We only invest in assets that will hold for that time frame,” Jain added.

The firm actively manages two funds: Diversified and Concentrated. The Diversified fund holds between 20-30 tokens at any given time, while the Concentrated Fund has six to eight digital assets.

“We look for protocols that replace middlemen with network participants,” Samani said. “We’ve spent a lot of time looking at the market opportunities and at which protocols are best suited to take advantage of those opportunities.”

Samani and Jain came out of the NYU Stern School of Business and both have tech entrepreneur backgrounds.

Crypto-currency funds have mushroomed in 2017 as the market capitalization of digital tokens exploded to roughly $170 billion. The price of bitcoin alone topped nearly $6,000 eight years after it burst into the scene.

Out of bitcoin came blockchain, a digital ledger of transactions that has underpinned its technology.

There are more than 100 crypto-hedge funds that manage between $2-$3 billion, according to data Autonomous NEXT, which tracks future technology in the financial services industry. The research firm said 75 percent of the crypto funds were launched this year.

Multicoin’s Jain also pointed out that one big difference between his firm and other funds is that the company has developed new tools and security measures to invest responsibly in the token ecosystem.

The company has built proprietary technology to solve the unique challenges of token investing at venture scale, Jain said.

Multicoin also announced that David Johnston is joining its advisory board. Johnston founded the first ever crypto fund, the Dapps fund, in 2014.

He also co-founded Factom, a decentralized system that uses blockchain technology for smart contracts, digital assets and database integrity, and currently serves as its chairman.