Alan Howard’s Adventures in Cryptoland
Cryptocurrency-based quizzes, non-fungible horse racing tokens and privacy specialists are all part of a vast and growing digital asset empire that hedge fund billionaire Alan Howard has quietly owned. built.
Howard is an influential figure in the hedge fund industry thanks to the success of Brevan Howard Asset Management, the $23 billion macro-trading firm he co-founded. However, in recent years, he has slowly let go of some of his corporate roles to become a major force in crypto venture capital in Europe and the United States.
The FT has compiled a list of 43 investments by Howard in crypto companies and projects – ranging from well-known ventures like the FTX exchange, to a start-up incubator and smaller NFT projects – based on information from venture capital databases Crunchbase, PitchBook and Dealroom and public announcements.
Howard has made his investments over the past five years, sometimes alongside US asset manager Tiger Global, Japanese technology group SoftBank and venture capitalist Peter Thiel.
“It looks incredibly random until you put it on a map, and then it looks incredibly strategic,” said an executive at a crypto firm who had worked with Howard. “He wants to be involved in all facets of the industry.”
Howard’s interest in cryptocurrencies began in 2017, according to people who worked with him, and he continued to invest in the sector despite the market’s ups and downs.
“He has a vision of 10 to 15 years. As everyone was running out, they were running,” the exec said of Howard’s decision to continue investing in companies during the 2018 crypto crisis. accelerated over the past two years and has continued despite the sharp sell-off in recent months.
Howard, who declined to be interviewed for this article, has maintained a lower profile than other top crypto investors such as Galaxy Digital’s Mike Novogratz. However, it has invested alongside Galaxy on projects such as the Bullish Global exchange and Derby Stars, which describes itself as “a metaverse game of horse racing where players can breed, grow, build and trade”.
Industry executives say the breadth of Howard’s investment portfolio puts him alongside Galaxy and Connecticut-based crypto conglomerate Digital Currency Group as a major force in the sector.
“They have very big crypto ambitions,” said a crypto investor who has worked directly with Howard.
Howard has rarely spoken publicly about his hedge funds or his crypto investments, although he commented in an email interview published by crypto news website The Block in May.
Howard said that crypto is “an important macro trend,” but because digital assets are still a new asset class, “it’s safest to invest in the broader crypto ecosystem of very diverse way.
Hedge funds have become increasingly interested in crypto investments in recent years, with the huge growth and returns catching the eye of an industry that has at times struggled to make money over the past few years. last decade. Many hedge funds have also started trading cryptos for this reason.
“As we see a number of macro investment managers launching or considering launching a crypto fund… Alan Howard has invested more broadly, publicly and directly in the digital asset ecosystem, including middle and back office and digital asset platforms,” said Quentin Thom, co-director of perfORM Due Diligence Services.
Howard, who tied the knot last month in a lavish event on the shores of Lake Como, began to step back from some of his hedge fund roles in 2019 when he handed over the post of director general from Brevan Howard to chief risk officer Aron Landy, although he continues to control the company, according to regulatory filings.
It came as Brevan Howard was recovering solidly from a long streak of poor performance when the company’s main fund, which had never suffered a down year before, lost money during three out of four calendar years between 2014 and 2017 and the company’s assets plunged. from $40 billion to as little as $6 billion.
Last year, Howard bought out outside investors in the AH fund which he personally managed and which had made huge gains from the Italian bond shock in 2018. Although he continues to have a trading portfolio in the framework of the master fund, he rarely trades, people familiar with said. with the firm.
He is, however, still actively involved in Brevan Howard’s $1 billion Digital Assets fund. “Alan is so focused on digital assets,” said one hedge fund investor.
A person familiar with Howard’s perspective said he was “heavily involved. . . in a variety of initiatives across Brevan Howard, including co-investment, strategic allocations and the crypto sector through BH Digital”.
Howard told The Block in May that “BH Digital reflects my belief in the importance of investing across the entire ecosystem, regardless of instrument, in a diversified and well-risk-managed way.”
His willingness to buy crypto assets stands in direct contrast to some other investors, who preferred to buy stakes in companies operating in the crypto sector.
Howard said venture capital funding and direct investment in crypto tokens and currencies should be considered together, as crypto projects are often made public very early in their existence by selling tokens to investors.
Along with his venture capital investments, the list of deals also shows that in most crypto categories where Howard invests, he has tended to back more than one company and across the entire market.
For example, he has invested in at least three exchanges and three custodians, companies that store digital assets for clients. He has also backed companies building crypto trading and portfolio management software, as well as several investment funds active in digital assets.
Other key components of its crypto portfolio include Elwood, a trading software company, start-up incubator WebN Group and Coremont Digital, the crypto-focused arm of the Brevan Howard spin-off back-office firm. . All three share a central office in London with Brevan Howard.
Away from the companies that provide the crypto market infrastructure, Howard has also made more niche investments. In November, he invested in a fundraiser by Iron Fish, a developer working on technology that enables completely private cryptocurrency transactions.
Howard is known for his long-term approach but his crypto wallet has seen some outflows. Newcastle-based crypto payments company Bottlepay was sold to US crypto group NYDIG last year, while institutional trading platform Omniex was acquired by twin Winklevoss’ Gemini Group in January.
Howard’s personal stake in Elwood plummeted when the company raised $70 million in outside investment from backers including Goldman Sachs and Barclays at a valuation of around $500 million. He did not participate in the round, but remains the majority owner.
He is also known as an art collector with an interest in ‘generative’ digital art which has its roots in 1960s computer art. He promotes the sector through a monthly digital art fair in London.
Although the current market downturn has put off many potential crypto investors, it offers opportunities for patient and well-funded investors like Howard.
“I think he knows what he’s doing. He works with the brightest in the crypto industry and is very well advised,” said the investor who had worked with Howard.
“I wouldn’t be surprised to see him come out the other side of this bear market as one of the biggest players alongside Galaxy. He’s positioning himself to take advantage of valuations.