A recent Bloomberg article showcases how movers and shakers in high finance are leaving high paying corporate jobs to jump into Blockchain, lured by the lack of regulation and large potential profits.
Paying close attention to the flow of institutional capital into the Blockchain token space helps make more informed investing decisions.
Takeaways for this article:
1. Beware the ICO... picking protocols vs picking companies
2. Institutional managers front running clients
3. Institutional capital is waiting on the sidelines for regulatory go ahead
This fits with the narrative that smart money is yet to enter the space in a major way.
Mark Hart, Founder of Morgan Creek Capital Management, details 5% of professional managers have personal exposure to Bitcoin, while only .5% of the institutions they manage have exposure.
This makes sense as few funds want a legally murky asset on their books. As regulation comes to pass, a tidal wave of institutional money sits on the sidelines waiting to enter.
Our hope is owning percentages of the fundamental protocol layers will shield us from company failures as the space develops, even if several of the protocols we invest in also fail along the way. This venture capital risk/return mindset is important when investing in such volatile assets.
Our next article will explore the ICO market further with different types of ICOs offered, and what their valuation propositions are.
Explanation of fat protocols - http://www.usv.com/blog/fat-protocols
Polychain Capital takes protocol layer approach - https://dailyfintech.com/2017/03/28/polychain-capital-a-hedge-fund-investing-at-the-protocol-layer-of-web-3-0/