Elad Gil, Electric Capital, Druckenmiller, and Bridgewater CEO Back Bitwise in Latest $70M Round

Bitwise Asset Management announced the completion of its $70 million Series B fundraising round and for the first time, publicly shared its valuation at over $500 million.

The San Francisco-based company is known for managing the world’s largest crypto index fund (OTCQX: BITW), and pioneering products from bitcoin and ethereum to decentralized finance and crypto-focused equity indexes. 

The round was co-led by technology investor Elad Gil and crypto venture fund Electric Capital with participation from a list of investors across the technology, cryptocurrency industries and Wall Street institutions, including: Daniel Loeb’s Third Point LLC, Daniel Och’s Willoughby Capital, Louis Bacon’s Moore Strategic Ventures, Paul Eisenstein’s Vetamer Capital and Coinbase Ventures.

Gil is a Silicon Valley-based investor who has advised or invested in a dozen-plus companies including Airbnb, Coinbase, Instacart, dYdX and Pinterest, to name a few. Electric Capital is one of the largest crypto venture capital firms and was an early investor in other crypto companies like Bitnominal and Kraken. 

Individual investors include: Henry Kravis, Stanley Druckenmiller, David McCormick (Bridgewater CEO), Daniel Sundheim (D1 CIO), Kevin Warsh (former U.S. Federal Reserve Governor), Nadeem Meghji (Blackstone executive), Tracey Warson (former Head of Citi Private Bank), Fidji Simo (Facebook executive), Helen Riley (Google X CFO) and several others.

Existing Bitwise backers including Highland Capital, Khosla Ventures, Blockchain Capital, Castle Island Ventures, Alison Davis, Adam Nash and Naval Ravikant participated as well, according to the company press release.

Bitwise hasn’t shared any prior valuations but has previously raised $4 million in a seed round in December 2017 and a $10.5 million Series A round led by Highlight Capital Partners in the summer of 2019, Bitwise CEO Hunter Horsley told Blockworks. 

As of May 2021, Bitwise has over $1.5 billion in assets under management, up 25% from the previous $1.2 billion AUM at the end of Q1. The company’s AUM is up more than 20x year-over-year, Horsley said. 

The company is currently profitable and plans to use the proceeds from its Series B round to strengthen its balance sheet and accelerate the national buildout of its organization, team and product suite.

Bitwise’s product suite has recently expanded during the past year and Horsley said the company will “likely launch multiple new products this year,” but didn’t disclose additional details. 

In February, the company launched the first decentralized finance index fund, the Bitwise DeFi Crypto Index Fund. In May, it launched the first “crypto industry” ETF in the US, the Bitwise Crypto Industry Innovators ETF, which tracks the Bitwise Crypto Innovators 30 Index of pure-play crypto equities. 

Pure-play crypto equities are publicly traded companies that focus solely on the crypto industry and the performance of the stock correlates highly to that business sector. Similarly, Bitwise is a pure-play focused company that covers one thing, crypto asset management, Horsley said. 

“Bitwise is purpose-built for crypto, and seamlessly blends technology with asset management to navigate a complex space that requires fundamentally different capabilities from other asset classes,” said Electric Capital Managing Partner Avichal Garg. “Their pure-play focus will serve Bitwise and their clients well as this exciting space continues to evolve.”

The Bitwise Crypto Industry Innovators ETF (BITQ) holds a portfolio of 30 different stocks of companies, including Coinbase, MicroStrategy, Galaxy Digital, Riot Blockchain and Voyager Digital. 

“We find that in crypto, because it’s so risky and complex, people are looking for the best heart surgeon, so to speak, not just a likable physician who can get the job done,” Horsley said, “We strive to be that.”

The company has over doubled the number of advisory firms it serves year-to-date with over 200 financial advisory firms with its products and has doubled the size of its research, client service and sales teams and plans to double them again by year-end, it said. 

“Blackstone isn’t the only firm that offers access to alts and private equity. BlackRock isn’t the only firm that offers access to public markets. And Bitwise won’t be the only firm to provide access to crypto. But we want to earn a reputation as a best-in-class partner,” Horsley said.