Meanwhile Group said it is focused on making conservative loans to creditworthy institutional borrowers, distinguishing itself from platforms that lend to retail investors at higher rates.
In a strategic move amid the ongoing crypto rally, Meanwhile Group, a Bitcoin-focused financial services company backed by OpenAI CEO Sam Altman, has announced the commencement of a Bitcoin private credit fund.
Meanwhile Group Fund: Structure and Objectives
The closed-end fund, which is aiming to attract institutional investors, promises a 5% income in Bitcoin (BTC). As highlighted in a press release, this initiative follows Meanwhile Group’s $20 million seed funding round in June, led by notable investors including Sam Altman, Lachy Groom, and Gradient Ventures (Google).
According to reports from The Block, the Bitcoin private credit fund is set to raise $100 million, with expectations to conclude fundraising by the end of the first quarter of 2024. Investors will contribute U.S. dollars to the fund, which will then be converted to Bitcoin. Notably, fees for the fund will be charged in Bitcoin, aligning with the company’s commitment to the digital asset space.
Zac Townsend, co-founder and CEO of Meanwhile Group highlights the importance of robust capital markets for a thriving Bitcoin economy, stating, “This private credit fund offers unparalleled potential for institutional investors to unlock the full value of their BTC holdings without compromising their ownership, seizing a unique opportunity for optimized returns.”
Notably, private credit, a long-standing practice in traditional financial markets, entails non-bank entities lending money to businesses and people. According to BlackRock Inc (NYSE: BLK), the sector will be worth $3.5 trillion by 2028.
Consequently, Meanwhile Group sees an opportunity to connect traditional finance with the developing Bitcoin economy by providing institutional investors with a way to realize the full value of their Bitcoin holdings.
The Bitcoin private credit fund stipulates a minimum investment amount of $250,000 per Limited Partner (LP), with no maximum limit. The fund has a three-year investment period, followed by a four-year harvest period, resulting in a seven-year total term. Importantly, capital is returned to investors during the harvest period, potentially returning the majority of capital well before the seven-year mark.
Meanwhile Group’s fund will implement a fee structure with a 2% management fee and a 20% carried interest fee, both charged in Bitcoin. Townsend clarified that the carried interest is triggered when the LP’s Bitcoin is converted into more Bitcoin, avoiding exposure to price appreciation risks.
The Fund’s Risk Mitigation and Custodianship
To address concerns about potential risks, Townsend highlighted the closed structure of the fund, eliminating the possibility of a “run on the bank.” This structure mitigates the risk of insolvency, a challenge faced by some crypto lenders in the past.
Meanwhile Group said it is focused on making conservative loans to creditworthy institutional borrowers, distinguishing itself from platforms that lend to retail investors at higher rates. The custodian for the fund is Anchorage Digital, a reputable name in the crypto custody space, adding an extra layer of security and trust for investors.
Moreover, Meanwhile Group aims to broaden its financial offerings denominated in crypto, including term life insurance and accidental death coverage in Bitcoin. This move aligns with the company’s previous venture, Meanwhile Insurance, which launched a Bitcoin-denominated life insurance policy earlier this year.