Traditional asset manager Accolade launches its second crypto fund. According to the firm, their initial crypto portfolio is performing better than their non-crypto funds.
Accolade Partners is known for their involvement in traditional venture and growth equity funds. Recently, however, the firm began its own dedicated pool of funds for crypto investments.
The plan is to raise $175 million for their offshoot, Accolade Partners Blockchain II LP, which is the name of their second fund reserve. Accolade intends for the fund to invest in around 10 different crypto venture funds, according to firm partner Atul Rustgi.
During the first quarter of their first fund, it closed with $124 million.
The asset manager is bullish on the future of crypto start-ups. Rustgi suggests crypto businesses may start to compete with conventional businesses across various industries in the near future. He particularly sees the potential of the technology behind DeFi, along with the boom of non-fungible tokens.
On behalf of the firm, Rustgi said, “we feel like there’s return potential here similar to what we saw in the early to mid-1990s in venture.”
Accolade Partners is among a small but growing group of institutional limited partners which now have a specific fund for funds for crypto start-ups. Others include the endowments of Yale and Harvard. The firm’s first investment reaches back to 2018, when it invested in a crypto fund backing Andreessen Horowitz’s fund.
At the time of writing, the firm invests in a number of other crypto venture funds. This includes firms such as Acrylic, Electric Capital, Framework Ventures, Polychain Capital, and Standard Crypto.
Investing in crypto
For many, an investment in crypto isn’t just an investment in an asset but an investment in the building blocks of society’s digital future. Accolade estimates around 150 crypto venture firms it could back. Currently, its portfolio includes the likes of Dapper Labs Inc, OpenSea, and Uniswap.
“You are seeing real traction, real revenue growth within blockchain,” Rustgi said. Already, 2021 has seen a record $17B invested into crypto from venture capital funds.
Despite the concerning news of tighter crypto regulations, the firm still believes in the future of the space. Rustgi believes that U.S. regulators will ultimately see to the side of crypto, “One should always be concerned about regulation, but to date the U.S. regulatory bodies have shown through their actions that they want to create guard rails for the asset class instead of shutting it down.”