Hedge fund manager Alan Howard explains why he’s investing across the entire crypto ecosystem

Hedge fund manager Alan Howard explains why he’s investing across the entire crypto ecosystem

Quick Take

In an exclusive interview with The Block, the Brevan Howard founder reveals the full extent of his crypto activities — which span public and private markets, token and equity investing, and even generative art.

Howard also revealed the existence of two new crypto-focused entities, an incubator named Web N Group and Coremont Digital, a middle- and back-office service provider.

British billionaire Alan Howard turned heads when he began investing in crypto startups in late 2020. But although it quickly became clear that the 58-year-old hedge fund heavyweight was dedicating a significant amount of time to the sector, few could have guessed quite how deep down the crypto rabbit hole he had gone.

In an exclusive interview with The Block, Howard — who generally keeps a low profile in the press — has for the first time laid out the full extent of his burgeoning crypto empire.

It is an operation that encapsulates an array of crypto infrastructure and investment management plays, spanning public and private market investing; equity and tokens; centralized and decentralized ecosystems; and even, albeit in a personal capacity, non-fungible tokens (NFTs) and generative art.

“You have to be in, and have exposure to, the crypto world to understand what is going on there, to identify the challenges and opportunities you’ll face and to know what infrastructure you will have to build to meet those challenges and opportunities head on,” said Howard, who responded to The Block’s questions in writing.

“In short, this is an important macro trend and a new asset class that can, and likely will, impact the evolution of technology and the economy at large for many years to come,” he said. “As I balance my broad thesis with the reality that digital assets are a nascent asset class, I argue that it’s most prudent to invest across the entire crypto ecosystem in a highly diversified manner.”

Howard went so far as to quote Theodore Roosevelt’s famous words on the importance of being “in the arena.” Today, there are few arenas in crypto that Howard has not stepped into. BH Digital

Howard rose to prominence as co-founder and CEO of the hedge fund Brevan Howard, which by 2013 managed some $40 billion in assets as one of the world’s largest macro funds. He stepped down as CEO in 2019.

While he is no longer trading, Howard told The Block that he remains “heavily involved” in various initiatives at Brevan Howard, including those relating to co-investing, strategy allocations and crypto — through an entity named BH Digital. “I couldn’t be more confident in BH’s leadership under CEO Aron Landy, and the 100+ portfolio management teams currently on the BH platform,” he added.

Set up earlier this year, BH Digital is the centerpiece in Howard’s crypto operation. Acting as Brevan Howard’s dedicated crypto arm, it helps investors such as sovereign wealth funds, pension funds, foundations and endowments gain exposure to crypto.

The organization currently manages more than $1 billion in assets and employs over 60 people. Of those, nearly 20 are portfolio managers, each with a different specialty — such as liquid tokens or seed-stage investing.

“BH Digital reflects my belief in the importance of investing across the entire ecosystem, regardless of instrument (i.e. token, equity, NFT etc.) in a diversified and well risk-managed way,” said Howard. “This ensures that your return stream is never dependent on just one strategy, one theme or one risk-taker.”

What that means in practice is that BH Digital invests in the equity of both private and public crypto firms, as well as in the tokens they may issue. Though the focus is broad, Howard identified stablecoins and payments; gaming and metaverse; DeFi and derivatives; smart contract security; aggregation of wallets; marketplaces; and cross-chain tools as target subsectors.

In the near future, he added, BH Digital will roll out market-making capabilities to help support new tokens by providing early liquidity — “bootstrapping liquidity,” in crypto-speak.

“We believe our 20-year history and legacy as an active participant in derivatives trading gives us an overwhelming advantage in DeFi investing,” said Howard.

Operating simultaneously across equity and token markets can be challenging for investors who have historically focused solely on either the former, a largely illiquid asset class, or the latter, which can usually be traded readily once initial “lockups” have expired. It is a shift that venture capitalists around the world are still adjusting to — some faster than others.

But Howard said the blend creates “a powerful feedback loop, allowing us to provide insights on market trends and opportunities for new market […]

source Hedge fund manager Alan Howard explains why he’s investing across the entire crypto ecosystem

Leave a Reply