Private Equity Firm KKR Invests in DeFi and Blockchain-focused ParaFi Capital

Private equity firm KKR & Co. has invested as a limited partner in ParaFi Capital’s flagship fund, a source familiar with the matter told Blockworks. 

KKR is a global investment firm with a market capitalization of over $53 billion. It manages multiple alternative asset classes, including a private equity portfolio composed of 109 companies that bring in about $244 billion in annual revenues. As of June 30, 2021, the firm has over $429 billion in assets under management, according to its website. 

The three-year-old ParaFi Capital manages about $1 billion and focuses on decentralized finance and blockchain technology. Its website states ParaFi Capital invests in digital assets that “address tangible use cases, demonstrate signs of product-market fit, and exhibit compelling cryptoeconomic models.”

KKR joins a list of other LPs invested in ParaFi Capital, including allocators across Silicon Valley, Wall Street, family offices, institutional fund of funds, venture funds, crypto founders and companies. ParaFi Capital’s investors also include venture capital firms Bain Capital Ventures and Galaxy Digital Ventures as strategic partners.

Ben Forman, the founder of ParaFi, has close ties to KKR, having spent time there leading research internally on blockchain before leaving to launch ParaFi in 2018, the source said to Blockworks, adding that the DeFi space is at an inflection point and there is growing adoption of blockchain technology and DeFi among institutional investors.

Both KKR and ParaFi Capital declined to comment when requested by Blockworks. 

In 2019, it was reported that Henry Kravis, co-founder of KKR, invested in the flagship fund for ParaFi Capital. However, a spokesperson for Kravis declined Bloomberg’s requests to comment at the time. 

In general, the crypto space has seen a huge influx of funding from traditional venture capital and private equity firms looking to dive into the digital asset world. In the first quarter of 2021, over $3 billion was allocated into crypto investments up 150% from $1.2 billion in the previous quarter, according to data from Pitchbook.

With that said, KKR joins a list of other investors and venture capital firms, like Andreessen Horowitz (a16z)  which created a $2.2 billion crypto fund back in June, that have heavily invested in crypto-related companies this year.