In Industry First, Crypto Asset Manager Morgan Creek Raises Money from Pension Funds

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by Bhushan Akolkar · 4 min read
In Industry First, Crypto Asset Manager Morgan Creek Raises Money from Pension Funds
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The $40 million investment fund of Morgan Creek will major focus on crypto investments along with other blockchain startups and token-based projects.

On Tuesday, February 12, Morgan Creek became the first company in the crypto sector to secure massive funding from pension funds, reports Bloomberg. Two separate pension funds of Virginia’s Fairfox County will be pouring investment into the Morgan Creek Blockchain Opportunities Fund. These two funds include the Employees’ Retirement System and Police Officers’ Retirement System.

Cryptocurrency asset management company Morgan Creek has been working since long to drive institutional participation in the crypto space. Last year in 2018, the company was managing over $1 billion worth of assets. Thus, the latest news comes as a big breakthrough for Morgan Creek Digital. Company founder Anthony Pompliano tweeted about the announcement, saying:

Investing in Cryptocurrency and Blockchain Startups

Morgan Creek said that its new fund will majorly focus on investing in cryptocurrencies, especially Bitcoins. Moreover, the company also plans to invest in blockchain startups and other token-based projects. It is likely that investors of this fund will also be having exposure to popular crypto companies like Bakkt, Coinbase and other lesser-known companies like Blockfi, Open Finance Network, RealBlocks, CityBlock Capital etc.

Earlier, Morgan Creek planned to raise $25 million for its newly launched blockchain fund. However, citing huge demand, the company increased the fundraising to $40 million with Fairfox’s entry.

In December 2018, Pompliano said that it will take time for institutions and pension funds to warm up to the crypto sector. He said:

“It will take time for pension funds to get comfortable with investing in Bitcoin. We need to educate multiple stakeholders and demystify this nascent industry. When one makes the decision, it will create a cascading effect that leads to hundreds of them jumping in.”

Institutions Looking for Long Term Crypto Investments

In the recent interview, Pompliano noted that institutions are looking for smart and long terms investments in the crypto industry. Pompliano said:

“There’s a belief in the institutional world that if the industry will be around for a long time, it will be very valuable,. The smart money is not distracted by price but looks at the long-term trends, and believes they’re betting on innovation as a great way to deliver risk-mitigated returns.’’

He further added that “These are incredibly intelligent, long-term thinking, permanent capital allocators and so, they have a very different mindset than retail investors or some other capital allocators”. While speaking to Hard Fork, the fundraising took place much earlier before the announcement. He added, “We also have invested a material amount of the fund to date already”.

Pompliano also opened up about the concerns expressed by his clients during the deal-making process. He stated that it was mostly business as usual. While further adding that “The concerns were not so much legal as this is only a traditional venture experience. We haven’t tried this in past, so this was the first venture capital fund we tried to raise, and are quite happy with the results. But, the diligence process was quite arduous — exactly what you would expect from large institutional investors like these.”

Industry Experts Extend Support

Katherine Molnar, the chief investment officer of the Fairfax County Police Officer’s Retirement System,  expressed optimism on participating in this new project. She said:

“Blockchain technology is being applied in unique and compelling ways across multiple industries. We feel it is important to be opportunistic and are excited to participate in this emerging opportunity, due to the attractive asymmetric return profile that it represents.”

Etoro senior analyst Mati Greenspan also appreciated this move saying:

“The timing just seems right for this type of action as well. With prices down 80% or more from the all-time high, now seems like a great time for managers of large investment funds to start dipping their toes in the water”.

Binance CEO Changpeng Zhao also welcomed this news calling a big step for crypto.

Asset manager Morgan Creek stays heavily bullish on the future of the crypto market. In December 2018, the company said that crypto markets will outperform the S&P 500 Index in the next decade.

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Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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