- Lennertz & Co., a small multifamily workplace, provided blockchain investing to the ultrarich early.
- Its head of funds, Oksana Tiedt, used the 2018 bear market to make main crypto VC investments.
- She recognized two under-the-radar corporations crypto buyers ought to find out about.
Lennertz & Co., a small, unique multifamily workplace in Germany, has develop into a European hub for the ultrarich to realize publicity to blockchain applied sciences.
Lennertz & Co. says its different funding platform has over 750 million euros, or about $837 million, below administration.
“We are big investors in private equity. We’re invested in venture capital both in Europe and the US,” Oksana Tiedt, its head of funds and co-investment, advised Insider in a current interview. “And for us, blockchain was then a couple years after we started, a natural continuation of our venture work.”
In simply 5 years the corporate has grown its consumer base to about 400 from simply 30, because of its publicity to illiquid different investments and its savvy early pivot to investing in blockchain know-how. Tiedt mentioned phrase of mouth has been how most purchasers have come to her.
“Because we’re venture investors, there might be somebody who builds a company within this venture fund, we meet them at one of the events,” Tiedt mentioned. “Next thing, they sold the company, they remembered us, they called back. So for us, it’s been a little bit of a flywheel.”
The agency’s first blockchain fund of funds launched in December 2020 and provided publicity to among the largest names in crypto enterprise capital, reminiscent of Multicoin Capital, Polychain, and Fabric Ventures. The first fund acquired 30 million euros in capital commitments.
The groundwork to safe these investments, nevertheless, had been laid lengthy earlier than.
Making large bets on crypto VCs
Bitcoin’s crash after the 2017 bull run gave Tiedt and her staff time to get to know who the intense gamers in crypto have been with out the froth available in the market.
“The little issue in 2017 was there was not really enough, or any, venture funds — they were just emerging,” Tiedt mentioned. “And so we spent a lot of time in the market getting to know people, getting into the entrepreneurs, making initial contacts, and getting to know all the people who were thinking about starting venture funds or then ultimately started venture funds.”
From the very starting Tiedt needed the main target to be on the publicity to the underlying know-how slightly than the digital tokens themselves.
As crypto enterprise corporations began to seal offers, Tiedt was prepared to leap in with Blockchain Fund I. Her firm has launched a second fund, Blockchain Fund II, which she mentioned she hopes will develop into a much bigger and higher model of the primary.
“If anything, we’ve got more conviction around the strategy,” Tiedt mentioned.
“However, we have not actively pursued very specialized funds,” she added. “The reason being it’s an industry in its infancy stage; it’s developing very, very quickly. What is a very hot topic today might change significantly tomorrow. So putting a cycle on top of a cycle in a pretty risky industry just doesn’t seem very prudent at the moment.”
Building a fund of funds
Investing in enterprise corporations is a two-way relationship, with the enterprise corporations additionally making an attempt to evaluate who they need as restricted companions.
“I would say we got that balance very right, whereby we’re seen as a good partner to the funds — that’s why we get access,” Tiedt mentioned. “And because we’re there for all those years and we invest across this asset class, we’re able to pick better funds.”
Tiedt mentioned the choice to work with enterprise funds typically comes all the way down to a mixture of laborious and tender info.
“On the hard facts, it’s the track record, the history, how they invest, what they believe in. Are they vocal? Are they silent? What else have they done? Have they done difficult deals?” Tiedt mentioned. “All of that is part of the hard numbers, which are analyzable to some extent.”
The tender info might be tougher to pin down — Tiedt mentioned she’s finally in search of a mixture of “techie people” in a enterprise staff who’ve beforehand coded for or run a blockchain startup and buyers from a conventional enterprise or enterprise background.
“What we’ve also seen, especially in the earlier times, is that people were solving technical issues, but they didn’t even begin to think about how to monetize it or how to set it up,” Tiedt mentioned. “And we believe that part of the services that the venture team should offer is actually guiding entrepreneurs on that journey.
“The very last thing is as a result of we construct a portfolio, we spend a variety of time fascinated by how totally different funds and totally different personalities match on this portfolio,” Tiedt said. “We don’t need related folks doing related investing over the same time period.”
Broad diversification helps shield the firm from market shocks. Tiedt said that both the COVID-19 pandemic and Russia’s recent invasion of Ukraine had a limited impact on the overall portfolio.
Tiedt acknowledged that while some portfolio companies would be affected by the fallout, “we tried to do that evaluation when COVID-19 occurred, and simply because we’re so diversified then on the finish of the day the consequences simply nibble at one another.”
But that doesn’t mean there isn’t a personal impact. Tiedt is Ukrainian.
“I at all times have the identical opening sentence, however it sounds fully off the final 4 weeks,” Tiedt said. “I come initially from the Ukraine, and I left in 1991.”
“It was turbulent instances again then, much less turbulent than now, however nonetheless I ended up staying within the US,” she added.
Tiedt doesn’t have any family in Ukraine anymore, but many of her friends are there.
Under-the-radar VCs
The diversification approach has resulted in Tiedt betting successfully on big winners including Multicoin Capital. Axios reported in December that Multicoin Capital had returned 20,287% since the fund’s inception in 2017.
“They made some very contrarian bets,” Tiedt said. “And that is what made their title. So I do assume they are a very robust fund.”
But not all successful crypto VCs attract as much attention as Multicoin Capital. Tiedt said Greenfield One and Sybil Capital, founded by Alexander Pack, are two crypto-focused venture firms that fly under the radar.
“That’s our job to search out these managers who’re devoted and have an incredible feeling for funding alternatives and dedication to the area,” Tiedt said. “So they get invited into these offers after which we again them.”
