Even as more traditional financial players enter the crypto world, blockchain investor Fortis Digital Ventures is closing a $100 million crypto fund that aims to bridge the gap between the old and new finance worlds.
“By building an investment fund focused on blockchain opportunities, we get to spend our time doing due diligence on teams and tech in web3, which gives us insight into what is missing in the market,” Mike Boroughs, co-founder and managing partner of Fortis Digital Ventures, told BlueHillco.
The new fund will be run by former hedge fund veterans and engineers, including Boroughs, who previously co-founded an RIA that had $250 million in assets under management, and his co-founder, Chris Capriccio, formerly VP of engineering at LegalZoom.
The fund aims to make blockchain investing easier through asset allocation, risk management and position sizing in crypto, the company said. And while it will target traditional investors, only affluent clients will get a seat at the table — those wanting in must invest a minimum of $250,000 and have a net worth of $2.5 million or higher, a spokesperson said.
“We want to ensure people we work with have access to this space, because the vehicles to invest in it through the traditional routes, like brokerage accounts, are severely lacking,” Boroughs said. However, given the volatile and complex technical nature of crypto, most traditional investors don’t have “the stomach or skill set” to properly invest successfully or long term, he noted.
While current market conditions may be bearish from the crypto chaos that caused the market to dip last week, Fortis’ investment strategy is holding steadfast, Boroughs said.
“The overall marketplace is likely to see a retraction in the easy money that was flowing to fund even questionable ideas and projects,” he said. “While a short-term headwind, we view this as a long-term positive, as it means projects will need to stand on their individual merits and not just use the terms ‘crypto,’ ‘blockchain’ or ‘web3’ in their marketing collateral.”
The firm will focus on investing in web3 companies that are building better user experiences and solving real-world issues for people or businesses, he said, adding that while weak projects could fail, those with high utility, high scalability and low barriers to adoption will succeed.
“There is a massive need in web3 for an upgrade in user experience, and we believe the best opportunities will be found at the intersection of great tech and amazing user experience in order to get wide mass adoption,” he said. “We view this as a huge opportunity for investors willing to stay the course and dig through the rubble to find the gems.”