Gone Crypto: Investing in the Intersection of Wall Street and Crypto
New Form Capital focuses on a new form of finance with an interest in investing in the intersection of Wall Street and crypto.
Alex Marinier, founder and partner, New Form Capital
- The investment space has grown immensely since last year, as some of the world’s largest investors and technological companies like Tesla, Square and PayPal came out and publicly stated support for cryptocurrencies, he said.
- When it comes to investing funds, New Form Capital looks at three buckets to invest in: DeFi, infrastructure and blockchain-based trading and securities
Meet Alex Marinier: the 29-year-old founder and general partner of New Form Capital, a venture firm investing in financial technology applications of blockchain technology.
His company invests in early stage entrepreneurs building blockchain-based financial technology and connects them to limited partners, or LPs, on Wall Street.
But this hasn’t always been his life.
Before he started New Form Capital in 2019, he was an investor at Sand Hill firm DCM Ventures, which has approximately $4.2 billion assets under management. Prior to that, Alex worked in private equity at Blackstone in New York underwriting secondary transactions for the company that has over $119 billion in corporate private equity AUM.
While at DCM in 2016, he figured out he could add value to the firm by focusing on frontier technologies, or emerging technologies, that investors didn’t have visibility into. Around the same time, mid-2016, he met Olaf Carlson-Wee, the founder and CEO of Polychain Capital, at an event. Carlson-Wee spoke for about an hour at the event and Marinier said he became excited about the space.
“I went out and did my own research over the next few months and really decided that [crypto] was one of the most interesting frontier technologies I’ve come across during my time at DCM, so I put together a 60-slide presentation that I presented to the global partnership on ‘Why Blockchain’ and ‘Why Now’ at DCM,” he said.
The presentation was well received by the founder of DCM, David Chao, and he gave Marinier the validation to do launching deals on behalf of the firm. For the next three years, Marinier said he led the company’s expansion into blockchain investing and helped bring exposure of the industry to traditional finance players.
“[Investors] might not be up to speed on crypto-native things — it’s not their day job to know what’s super applicable to them in the space — but I do bring these concepts up to them and you see a lightbulb go off,” he said.
During that time, Marinier said he saw a huge rise in interest and a lot of investors would ask him about what’s transpiring in the blockchain world and whether or not they should invest in the technology. It was then he realized through pitching to big investors that they were going to invest “big dollars in this space,” he said.
“The launch was a way for me to build out a track record and after a few years, I decided that I had so much conviction around this space and felt the opportunity was so large that I decided to spin-out and launch this seed fund called New Form in New York,” he said.
Creating a bridge
New Form Capital, as its name implies, focuses on a “new form of finance with an interest in investing in the intersection of Wall Street and crypto,” Marinier said.
“We went after strategic LPs from the Wall Street space whether they were macro-hedge fund guys, private equity guys or bankers. They all saw the headlines and it wasn’t their day job to be in the weeds on this stuff, but they all wanted a little bit of exposure,” he said.
When Marinier went to raise the company’s first fund, Fund One, of over $20 million, he tapped into the contacts he built during his time at Blackstone and DCM Ventures to raise the fund which they closed on a few months ago.
The company had their first close on September 30, 2020, and have invested in 17 different companies including the global borrowing and lending platform exchange Vauld. “The moral of the story is that we’re off to the races at this point and almost fully deployed Fund One,” he said.
When it comes to investing funds, Marinier said they look at three buckets to invest in. The first in decentralized finance, or DeFi, because about one third of their funds are in DeFi networks and it’s a huge theme that’s only going to grow going forward, he said.
Second, the company looks to invest in infrastructure companies because “crypto is the Wild West and needs infrastructure over the next couple of years because it’s a high growth space that will drive investors,” he said. And lastly, the company looks to invest in blockchain-based trading and securities because they’re the backbone of new and improved trading infrastructure, he said.
Shifting investment sentiments
The investment space has grown immensely since last year, as some of the world’s largest investors and technological companies like Tesla, Square and PayPal came out and publicly stated support for cryptocurrencies, he said.
“That’s obviously a good sign and what that did was it de-risked the space for a lot of institutions to start dipping their toes in,” he said.
The cryptocurrency market has experienced a huge uptick in fundraising, with blockchain start-ups raising a record $4.38 billion in Q2 of this year, according to data from CB Insights.
Additionally, the global fintech industry saw 88 rounds of deals worth over $100 million, up from 60 rounds in the first quarter of the year, the data showed. Although not all of those deals in the report went to cryptocurrency companies, the money and news speaks for itself as announcements pile in almost daily about new funding rounds in the crypto space.
“The conversation went from ‘it’s too risky to invest anything in cryptocurrency’ to ‘it’s almost risky not to have anything invested at this point,’ so we’ve seen an acceleration where institutions are really starting to look into deploying into the space” Marinier said.
Going forward, New Form will head out to market later this year for Fund Two, with a target of $75 million and hopes to bring on venture partners for that round.
Marinier said he expects more traditional funds to write checks in the space and larger macro funds will invest in crypto in the near future. “My hope and observation is that we’ll see more institutional money flow into the space,” he said. “We’re seeing an uptick of interest in the space,” he said.