Anthony Pompliano: Two Public Pensions Invest In Morgan Creek’s New $40 Million Crypto Venture Fund
Two public pension funds have decided to enter the crypto venture capital market. Fairfax County’s Police Officer's Retirement System and Employees’ Retirement System have decided to start investing in a Morgan Creek Capital fund.
Morgan Creek is an asset manager that is mostly focused on family offices and institutional clients. Just last year, the company had over $1 billion worth of assets under its management.
This morning our team at Morgan Creek Digital announced a new $40 million crypto venture fund anchored by two public pensions.
The institutions aren’t coming.
They’re already here. 🚀
— Pomp 🌪 (@APompliano) February 12, 2019
The company has announced a new $40 million USD venture fund focused on crypto this week. Anthony Pompliano, a partner of the firm, has affirmed that these two public pension funds will be a part of the initiative. The fund was initially set to raise only $25 million, but the value was almost doubled at the end.
Investors from this new fund will include a hospital system, insurance company, university endowment, and a private foundation, according to reports.
Katherine Molnar, the Chief Investment Officer from the Fairfax County Police Officer’s Retirement System, has affirmed that cryptos are a very new industry and that they are very compelling because they are new ways to invest in the market today. According to her, it is important to participate in this kind of opportunity as it emerges because it can give a return on investment later.
According to Pompliano, Fairfax’s government fund has $4.25 billion USD while the police fund has around $1.45 billion USD. Because of this, they will only use a very small percentage of their money investing in cryptos and this will still be a very large amount of cash, as these two funds are very large.
It's not the amount, the $40 million figure isn't really important. It's the fact that public pensions invested in a crypto fund that is impressive.
It means institutional investors see a good enough infrastructure in crypto and they feel comfortable with the asset class.
— Joseph Young (@iamjosephyoung) February 12, 2019
While we have seen other funds considering this strategy in other times, such as the California Public Employees Retirement System, which considered the idea back in 2016, these are still the early days for this kind of idea and not a lot of funds are used to the idea yet.
Outside of the United States, the South Korean National Pension Fund, the third largest one in the whole world, has invested around $2.3 million USD in crypto exchanges, which is almost nothing for such a big fund.
Morgan Creek’s Crypto Fund
The idea of the fund is to make seed investments in equities or token-based projects with large cash flow, as well as to hold a small number of key cryptos. The Morgan Creek team offered this idea for the funds as they are challenged by meeting their obligations over the years and these new assets can help them to achieve big returns.
Only tokens that are fully compliant with the legislation promoted by the U. S. Securities and Exchange Commission (SEC) will be approved and the opportunities with more cash flow and liquidity will be prioritized.
This way, these pension funds can be more exposed to this kind of investment at the same time that their risks are severely mitigated, Pompliano believes. They take only a share of their capital and their returns might be quite big.
There are rumors that a lot of public pension funds were starting to get not as profitable as they needed to be, so news like this comes at a good time because these funds will have more options now.
At the time, the fund has already closed deals with some high-profile companies from the crypto world, such as Coinbase, Bakkt, Harbor, TrustToken and Good Money, as well as some other lesser-known companies.