Goldman Sachs and Barclays have invested in Elwood Applied sciences, the cryptocurrency buying and selling platform based by British hedge fund billionaire Alan Howard, in a recent wager on the mainstream adoption of digital belongings.
The 2 banks invested alongside enterprise capitalists Daybreak Capital and the enterprise divisions of German lender Commerzbank and Galaxy Digital, US billionaire Mike Novogratz’s crypto monetary group. The spherical, Elwood’s first outdoors fundraising, valued the six-year outdated firm at roughly $500mn, in line with individuals conversant in the phrases.
Elwood is relying on conventional monetary establishments — from hedge funds to banks and household places of work — ploughing more cash into digital belongings regardless of the sharp fall in crypto belongings costs. The market worth of the highest 500 digital belongings is down by greater than half from their highs final yr, in line with CryptoCompare knowledge collated by the Monetary Instances. Bitcoin on Tuesday dropped under $30,000 for the primary time since July.
The Elwood funding spherical was agreed earlier than the newest weekly downward slide. Based as a automobile to handle Howard’s private crypto fortune, the corporate gives market knowledge and buying and selling infrastructure to large traders in digital belongings.
Chief govt James Stickland shrugged off the drop and referred to as the fundraising “one other validation of the longevity of crypto”.
“We’re getting funding from monetary establishments that aren’t anticipating to get large returns in quarter-hour. They’re investing within the infrastructure,” he mentioned. “I believe it’s a reassurance message.”
The $70mn fundraising cements a change of route for Elwood, which as just lately as 2019 was centered on asset administration, planning to supply portfolios of crypto funds for institutional traders. Elwood now sells the tech that it developed in-house to handle its personal crypto investments to different purchasers, mentioned Stickland, who joined the corporate in 2020 to steer its drive to change into a software program supplier.
“As institutional demand for cryptocurrency rises, we now have been actively broadening our market presence and capabilities to cater for shopper demand,” mentioned Mathew McDermott, world head of digital belongings at Goldman Sachs. He added that the funding confirmed the US financial institution’s “continued dedication” to digital belongings.
Elwood gives a tech platform akin to the Bloomberg terminal or BlackRock’s Aladdin portfolio administration system, in line with Stickland, which goals to plug into current buying and selling software program at monetary establishments to assist them handle and commerce their crypto portfolios.
In February, the corporate introduced a partnership with Bloomberg to attach its software program to the US buying and selling platform’s order administration system.
“Except the infrastructure is there, and also you get consolation across the high quality of the underlying structure, you then’re by no means actually going to get the quantity to match the chance,” mentioned Stickland.
Elwood will stay majority owned by Howard, who had been its principal investor earlier than the deal. The co-founder of the Brevan Howard hedge fund is among the most distinguished UK traders to make the leap into crypto markets.