Startup Raises $20M to Bridge Crypto, Wealth Management

key takeaways

Eaglebrook plans to expand to broker-dealer and wirehouse markets in 2022, CEO says
Wealth management space has been “completely underserved” from a crypto product perspective, according to Castle Island Ventures Partner Sean Judge

A cryptocurrency investment firm has raised an additional $20 million of capital as it devises new products for wealth management professionals.

The Series A investment round for Eaglebrook Advisors— a registered investment advisor (RIA) that specializes in separately managed accounts (SMAs) — was led by venture capital firms Castle Island Ventures and Brewer Lane Ventures. Other backers include Gemini’s Frontier Fund, Fidelity Investments affiliate Avon Ventures, Jump Capital and Sybil Capital.

“This funding gives Eaglebrook the opportunity to improve our technology and solutions for wealth management firms,” Eaglebrook CEO Christopher King told Blockworks in an email. “We will continue executing in the RIA market and plan to move towards the [independent broker-dealer] and wirehouse markets in 2022.”

Founded in 2019, Eaglebrook works with about 500 financial advisors and 40 RIAs in the US that allocate client capital to Eaglebrook SMAs.

Eaglebrook is focused on accelerating the adoption of crypto SMAs as the vehicle of choice for wealth management firms. Looking to go beyond bitcoin and ether, King said, the firm is looking to add products focused on decentralized finance (DeFi), layer-1 and layer-2 protocols, NFTs, gaming and yield opportunities.

Castle Island Partner Sean Judge told Blockworks that wealth management has been “completely underserved” when it comes to crypto products. As the wealth transfer from baby boomers to millennials accelerate, he added, advisors will look for new ways to serve the younger generation.

“From all the diligence we’ve done from talking with RIAs and asset managers, it’s pretty clear that they’re looking for a solution, and we believe that fundamentally over time they’re going to continue to look for a solution,” Judge said.

The US Securities and Exchange Commission (SEC) has not yet approved an ETF that would hold cryptocurrencies directly. The agency gave the go-ahead to the first bitcoin futures ETFs in October, though industry watchers have said such products may not be a great tool for advisors and long-term investors.

“From a product perspective, separately managed accounts are fundamentally just a better end product for clients,“ Judge said. “But also, what Eaglebrook has built from a technology perspective to integrate with the broader portfolio and integrate with all the other technology solutions that these financial advisors use is a really unique asset.”

The fundraise follows Eaglebrook’s announcement in November that it would launch a crypto educational platform for advisors. King called the $30 trillion wealth management market at the time “the biggest elephant in the room and the lowest-hanging fruit” for the crypto industry.

A report published last week by Bitwise Asset Management and ETF Trends found that the percentage of financial professionals investing client funds in crypto rose from 9% to 15% over the past year.

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