- The fund is one of a growing number of new NFT-focused vehicles as institutional investors crave exposure to the space
- Liquidity is an issue with digital collectible funds, with hedge and private equity setups both in contention for limited-partner lockup periods
A fine art collector is laying the groundwork for an NFT fund for institutional investors with the backing of a Miami family office, Accretion Capital, according to two sources familiar with the matter.
Edward Burillo, who founded Accretion in 2013, plans to launch the vehicle sometime in the second quarter, the sources said. The fund plans to invest in short-term plays, including purchasing fresh NFT (non-fungible token) mints and related tokenomics projects, plus a medium-term approach that emphasizes trades based on market inefficiencies.
Sources were granted anonymity to discuss sensitive business dealings. Burillo declined to comment.
Accretion focuses on venture capital investments, ranging from pre-seed to Series B rounds. The new fund is set up as a separate entity from the family office. However, a number of undisclosed investment partners are also working on the launch.
The vehicle, dubbed Accretion NFT Fund, is also poised to engage in longer-term strategies, including buying and holding blue-chip NFTs such as Bored Ape Yacht Club collectibles and CryptoPunks.
The fundraise comes as a growing number of crypto asset managers are meeting expanding institutional investor interest in digital collectibles with funds focused specifically on this corner of crypto. Liquidity is one issue, with some portfolio managers favoring a private-equity style lockup period — like traditional fine art funds — and others employing a hedge fund setup.
“In theory, to do it as a hedge fund, you need [valuation] metrics,” one source said. “But if you think of it more like art, you need to stick it in a PE fund.”
“There are a lot of opportunities to make money in this right now. Pricing is all over the place, and not a lot of traders actually know what they’re doing.”
Burillo is raising a founder’s share class with preferred fees and a lockup period. After it expires, limited partners will be able to redeem on a quarterly basis, one source said. It is not clear how much capital he’s raising overall.
Launches from anonymous NFT traders with solid track records are also gaining interest. Case in point: Punk6529, an influential voice on crypto Twitter, is starting an NFT-focused hedge fund, Blockworks reported.
Accretion also invests on its own accord in blockchain companies, including taking stakes in promising Web3 startups.
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