A COMPLIANT DIGITAL ASSET VENUE FOR TRADITIONAL INSTITUTIONS

Blockchain Coinvestors Investment News

Mid Stage Growth Fund Invests in Archax

 

A Compliant DIGITAL ASSET venue for Traditional Institutions

 

The blockchain space has exploded in the past few years as the market begins to wake up to the potential of digital assets and securities; Ark Investments projects the global cryptocurrency market cap to exceed $3tn by 2025 and yet hitherto, retail investors have been the first to access digital assets, focusing primarily on cryptocurrencies. Nevertheless, more institutional investors are also now beginning to realize the inefficiencies in traditional capital markets, particularly in post-trade settlement; Cointelegraph projects the worldwide security token market cap to exceed $14tn by 2025.

 

In fact, institutions have been scrambling to establish exposure to digital assets & securities to meet the growing demand, but have been underserved by the current market. JP Morgan, Goldman Sachs, Fidelity, and Blackrock have all rushed to set up digital asset practices and trading desks in the past 2 years, but remain cautious and conservative, and many institutional players have elected to wait for a more transparent, regulatory-friendly inroad. Institutions are set to be key players and ignite the next wave of global blockchain adoption and investment, and their clients are demanding it, but they’ve held off due to the lack of transparency and regulatory compliance by many market participants. Therein, the uncertainty regarding the security of this nascent space has created a massive underserved demand from institutions worldwide for a reliable, regulated, safe, and transparent solution in an institutional-grade package.

 

Archax: The Regulated Gateway to Digital Markets

 

Archax is the first ever global cryptocurrency & regulated digital asset ecosystem built with institutions in mind, which allows institutions to access digital assets in a fully regulatory-compliant manner. Founded in 2018, Archax is the first, and only, digital securities exchange regulated by the Financial Conduct Authority (“FCA”) in London and has secured coveted FCA brokerage, custody, and virtual asset service provider permissions, allowing Archax to bring the traditional trading experience to digital assets in a regulatory-complaint, institutional-grade package. Archax, built to support both digital assets and existing traditional securities, offers institutional services including, brokerage, custody, primary capital raises, token issuances, and a regulated exchange across its proprietary platform. By offering services from primary raise to trading, Archax is positioned to capitalize on the institutional shift to the digital asset trading lifecycle.

 

A Growing and Investable Market

 

Commerce is digitalizing, and the world’s assets will travel on tokenized rails. As regulated and compliant investors increasingly demand access to these digital assets, the market opportunity for a regulated, institutional-grade digital assets solution is only growing larger. At its core, the digitalization of assets represents a multi trillion-dollar opportunity (by some estimates a $1,400tn+ market), as a larger share of the world’s physical assets become tradable in digital form. This includes assets which have some current digital aspect, such as gold ($9.1tn) and stocks ($109tn), but also extends to other hard and/or illiquid assets such as real estate, art, and public debt ($800T+). In essence, the total addressable market represents nearly all real-world assets. As the transition to digital occurs, regulators are beginning to take interest (see Letter from London Vol 1., No. 2), creating an opportunity for regulated offerings to secure large portions of the emerging global market.

 

A Global Leader

 

While many players have tried to capture the institutional market, Archax was built with institutions and regulation in mind, and is better positioned to meet the growing institutional demand. Existing crypto and traditional competitors have comparatively limited coverage capabilities and lack of regulatory permissions.

 

Market stablecoin leader, Circle, offers primary raise services for traditional securities and crypto, but only offers custody, brokerage, and settlement for digital assets. Popular trading app Robinhood offers trading, brokerage, and settlement for traditional and digital assets, but doesn’t support custody. Investment platform Bullish Global supports trading, custody, brokerage, and settlement, but only for cryptocurrencies. Institutional offerings like Bakkt and LMAX Digital offer trading, custody, brokerage, and settlement, but only for certain digital assets. Archax meets all of these needs, in one compliant platform.

 

By participating in all parts of the value chain, from primary raises to trading, custody, exchange, and settlement, Archax is positioned to service the whole trading lifecycle, and consequently, its total addressable market far exceeds niche competitors operating in a single vertical. Archax is also built to accommodate digital securities, existing traditional securities, and cryptocurrencies, allowing them to serve both new and existing market demand in a single, comprehensive solution.

 

Given the unique value proposition Archax brings to institutional players, it’s no surprise that Abrdn, one of the world’s largest institutional investors, with more than $500bn in assets, led the Archax Series A funding round. In an announcement of the partnership, Abrdn CEO Stephen Bird stated that “Archax is one of the most promising UK players in this next expected high growth area in finance – the use of digital and tokenized securities with same-day settlement… [and our] investment not only provides an opportunity for substantial financial benefits, it also creates a partnership with some of the leading thinkers in an area that has the potential to play a substantial role in the future of finance.”

 

A Strong Team with a Well-Timed Offering

 

Led by a team of experts in capital markets – notably CEO Graham Rodford – and having already secured coveted FCA regulatory permissions in London, Archax offers a credible bridge between the blockchain world and existing financial institutions. In addition to their unique regulatory moat and first-mover advantage, the Archax leadership team brings years of experience in capital markets and regulated environments. With deep executive expertise and backed by an accomplished advisory board, the Archax team has a deep understanding of the blockchain landscape and tokenization – and a vision for how to evolve them and open up digital assets to institutions in a transparent manner.

 

Having already identified 5,000+ digital investment funds, 1,500+ asset managers and hedge funds, 500+ VC firms, 200+ UK-based brokers, and more than 50 market makers to target as part of their go-to-market plan, Archax is well-positioned to meet the growing demand worldwide for an institutional-grade, regulatory complaint offering covering the full trading lifecycle. To date, retail has driven the majority of growth in digital assets. With institutions poised to enter the market, Archax is the regulated gateway to global digital capital markets that institutions have been waiting for.

 

Thank you for reading,

 

Blockchain Coinvestors Investment Team

ABOUT BLOCKCHAIN COINVESTORS

 

Launched in 2014, our goal is to provide broad coverage of the emerging unicorns and fastest growth blockchain companies and crypto projects. The strategy is now in its 9th year and has to date invested in more than 40 pure play blockchain venture funds in the Americas, Asia and Europe; and in a combined portfolio of 400+ blockchain and crypto projects including approximately 60% of all blockchain unicorns. Our funds rank in the top decile amongst all funds in their respective categories on both Pitchbook and Preqin. Headquartered in San Francisco with a presence in Grand Cayman, London, New York, Zug and Zurich, the alternative investment management firm was co-founded by Alison Davis and Matthew Le Merle.

FUND PERFORMANCE

 

Blockchain Coinvestors Fund III (Fund of Funds) was created to provide diverse coverage of the best blockchain pure play venture funds in the Americas, Asia, and Europe. Blockchain Coinvestors Funds I and II have already experienced significant appreciation. Fund I Net TVPI is 5.45x with an IRR of 79%. Fund II shows equally impressive early results with Net TVPI of 2.13x and an IRR of 106%. Almost all of our fund investments are performing as top quartile against the Cambridge Associates Venture Benchmark.

BLOCKCHAIN COINVESTORS FUNDS

Blockchain Coinvestors’ goals are to provide broad coverage of the emerging unicorns and fastest growth blockchain companies and to capture superior returns from investing in the leading blockchain venture partnerships. Our funds are open to investors that meet the Qualified Client definition with a minimum subscription level of $250,000 at the discretion of the Manager. 

 

  • Blockchain Coinvestors Fund III (Fund of Funds) was created to provide diverse coverage of the best blockchain pure play venture funds in the Americas, Asia, and Europe. Blockchain Coinvestors Funds I and II have already experienced significant appreciation. Fund I Net TVPI is 5.45x with an IRR of 79%. Fund II shows equally impressive early results with Net TVPI of 2.13x and an IRR of 106%. Almost all of our fund investments are performing as top quartile against the Cambridge Associates Venture Benchmark.

  • Blockchain Coinvestors Fund IV (Early Stage Token) provides direct access to promising private stage token projects accessing our relationships with many of the world’s leading blockchain investors. We leverage asymmetrical information from our 40+ VC Funds to pick the most attractive opportunities. This is a continuation of the direct token investing strategy of the Fund Manager that has included private stage investments in Acala, Filecoin, NEAR, Polkadot, Structure, and others.

  • Blockchain Coinvestors VI (Mid Stage Growth) provides direct exposure to the emerging category leaders in the blockchain and crypto ecosystem. The fund leverages our unique sustainable competitive advantage (USCA) in blockchain, web3, and fintech to create a concentrated portfolio of between 20 and 30 investments with attractive return profiles and visible paths to liquidity. The fund assesses the more than 400 blockchain and crypto projects in which we are direct and indirect investors and employs a robust investment framework to select investment opportunities into the leading mid stage growth rounds - typically Series B, C and D. This is a continuation of the mid stage investing strategy of the Fund Manager that has included investments in Bitwise, Brex, InfiniteWorld, Securitize, Uphold, Wyre, and others.

Please visit the Blockchain Coinvestors website to learn more about our offerings. You can also reach our Investor Relations team directly at ir@blockchaincoinvestors.com.

BLOCKCHAIN COINVESTORS SWISS

We are excited to announce that Blockchain Coinvestors Funds are now available through Swiss certificates for those of our non-US investors who prefer this approach. The underlying fund is the same, however, our Zurich based team at Blockchain Coinvestors Swiss, who will introduce in future weeks, can provide detailed information regarding this investment option. Email us at mlemerle@blockchaincoinvestors.com to learn more.

BLOCKCHAIN COINVESTORS ANGELLIST SYNDICATE

Continuing the theme of the democratization of investing, we have a rapidly growing Blockchain Coinvestors syndicate on AngelList providing access to selected coinvestments. Please join us and our partner Lou Kerner on AngelList.

Click here to receive the insightful weekly crypto newsletter and webinar invitations from our Blockchain Coinvestors partner Lou Kerner.

REGISTER NOW FOR UPCOMING WEBINARS AND CALLS

 

Our investment team hosts regular webinars and calls to help educate our community about the Fifth Era, fintech, blockchain and crypto. We discuss important trends, tailwinds and investment themes including what we have learned and how we are using our knowledge to inform our own investment thesis and actions. Below is a list of upcoming webinars for which you can register by clicking the links:

 

Fund VI (MSGF) Investment Thesis
- September 14th, 9:00am PT
 

Institutional Investors - Making the Case for Blockchain

- September 19th, 7:00am PT
- September 19th, 12:00pm PT

 

What is Blockchain-Based Gaming?

- September 26th, 7:00am PT
- September 26th, 11:00am PT

 

Recordings of past webinars and calls can be found at www.blockchaincoinvestors.com/webinars.

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