An undisclosed endowment has signed up to a $40m cryptocurrency-focused fund managed by Morgan Creek Digital Assets that will make seed-stage and token-based investments.
An unnamed university endowment is among the investors to have signed up to a new $40m cryptocurrency-focused venture capital fund seeded by crypto investment management firm Morgan Creek Digital Assets, CoinDesk reported on Tuesday.
Morgan Creek’s vehicle is being anchored by two public pension funds, Police Officer’s Retirement System and Employees’ Retirement System, and will also be backed by an undisclosed hospital system, insurance firm and private foundation.
The fund will generally back seed-stage equity rounds but will also hold modest quantities of major cryptocurrencies and have limited authority to back cash-generative crypto startups on token terms so long as the transaction meets US Securities and Exchange Commission regulation D for smaller companies.
Anthony Pompliano, founder and partner at Morgan Creek Digital Assets, which is backed by investment manager Morgan Creek Capital Management, claimed it marked the first time public pension funds had contributed to a cryptocurrency fund, in a likely reflection of the challenges the sector faces in fulfilling pension obligations over coming years.
He added: “The belief is this gives them great exposure to what we believe are some of the best risk-mitigated opportunities in a nascent industry. You can take a small amount of capital, you can put it in a nascent industry, you can manage your risk correctly but also get exposure to true innovation.”
Morgan Creek’s vehicle has already made a number of investments, including a commitment to Coinbase itself as well as to digital currency trading platform Bakkt, which raised almost $183m in January 2019 from investors including software producer Microsoft’s M12 subsidiary, payment technology provider PayU and futures exchange operator Intercontinental Exchange.
Other portfolio companies include bitcoin lending service BlockFi, blockchain-powered asset trading platform TrustToken, digital securities portal Harbor and digital banking company Good Money.
A number of university investors and projects have moved into the digital currency space in recent months in a signal the sector is gearing up to bet on emerging crypto and blockchain technologies.
Yale University’s endowment was identified by Bloomberg as a limited partner in a targeted $400m digital asset-focused fund called Paradigm in October 2018, the month before Plekhanov Russian University of Economics partnered bitcoin mining infrastructure provider Bitfury to pilot a blockchain startup accelerator with Russian government funding.
Other digital currency-orientated university initiatives include an accelerator run by Columbia University and technology group IBM as well as a blockchain course reportedly being set up by University of Tokyo with the help of a $800,000 donation from financial services firm Sumitomo Mitsui Banking Corporation.
