February 24, 2020

Brooke Pollack: From A $8B Venture Capital Platform To A Crypto Fund of Funds

39 minutes

Host Tom Shaughnessy talks to Brooke Pollack, Founder and Managing Partner of Hutt Capital. They discuss the differences between traditional VC funds and VC within blockchain, how Hutt Capital chooses investments and more.

Episode Highlights:

After a lot of work with investing and VC, Brooke steered Greenspring Associates into work with crypto and blockchain before eventually founding Hutt Capital.

In his work with very wealthy families as clients, Brooke had trouble convincing them to invest in Bitcoin and digital currencies because they prefer something tangible, so he needed to do a lot of educating.

Blockchain is growing its market share of VC deal activity.

There were over 600 blockchain deals in 2019.

Brooke thinks the tipping point for when larger firms will have to stop ignoring crypto is when they’re forced to pay attention to the returns they see happening that they want to have a part of.

Hutt’s goal is to provide diversified exposure to blockchain in a low-risk, low-volatility way.

They invest in startup funds and then use that revenue to directly invest in the best companies.

When deciding what to invest in, Brooke looks for insight from his network and the reputation of the companies.

Hutt has a global outlook.

In choosing what to invest in, in the blockchain space, you don’t have the track record or long-term reputation to look at because most of these companies haven’t existed for very long, and if they have, the market has changed massively in that time.

All of this decision making is done through relationship building, which can take years.

One of the biggest structural changes to venture funds has been the advent of hybrid funds that call themselves venture funds, but are actually just less liquid versions of hedge funds.

Most people will simply not invest in your first fund, so take a long view of those relationships.

It’s hard to prove your qualifications to invest in this space without having done it.

Key Points:

There is a high level of self-educating that is required to enter into the blockchain space.

Hutt Capital seeks to provide an entry point to blockchain investing that is low-risk and low-volatility.

Choosing funds is all about relationship building.

Quotes

“I think it’ll happen sooner than later. I think the education process a lot of these groups are going through over the next year or two will lead to meaningfully more institutional capital coming into the space.” –Brooke Pollack

“Looking at funds in this space versus general venture investing, you don’t have the breadth of a track record to go off of… Most of these funds haven’t been around for more than a couple of years.” –Brooke Pollack

“It’s hard to prove that you can be successful as an investor in this space if you have not yet been an investor in this space.” –Brooke Pollack

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