German investment firm Lennertz & Co. is poised to become one of the largest funds of funds operating in the blockchain space as the firm seeks to raise $165 million for its third blockchain-focused vehicle. cryptography. In an interview with Fortune, Lennertz’s fund’s chief investment officer, Oksana Tiedt, said the fund has already achieved its first close, although she declined to share a figure.
A multifamily office established in 2015, Lennertz invests in different asset classes, including private equity and traditional venture capital. The company began betting on the blockchain space around 2016, investing privately in a fund before launching a $35 million fund of funds in 2020 and a second $65 million fund in 2022.
As a fund of funds, rather than investing directly in portfolio companies or tokenized transactions, Lennertz invests in other companies, including well-known cryptocurrency companies such as Multicoin, Polychain, and Hack VC. Its second fund focused on generalist funds with crypto strategies, including Bain Capital, Lightspeed and Andreessen Horowitz.
Tiedt said Lennertz decided to raise a new fund in part because of how his crypto holdings performed compared to other investments. “We’re seeing real distributions from these funds, so in a tight market like this, everyone from private equity to venture capital is struggling with the lack of distributions,” he said. -she declared. “Blockchain is actually quite comfortable.”
Investment strategy
The past few years have been a roller coaster ride for the crypto industry, with the 2021 bull market giving way to the FTX collapse in late 2022, followed by a modest recovery spurred by the approval of Bitcoin ETFs in early 2024 Today, prices are largely stagnant for major assets, with little appetite for new token launches and mainstream projects.
Tiedt said Lennertz’s strategy of investing in other funds, rather than directly in companies and tokens, helped him avoid the pitfalls of recent volatility. She said she is optimistic that funds are starting to look beyond infrastructure and middleware projects, with increased adoption coming, particularly at the B2B level. “The topics that are interesting, of course, are anything related to DeFi (decentralized finance) and anything related to the intersection of blockchain and AI,” Tiedt said. Fortune. “So it’s all about distributing data rather than centralizing it.”
In his third fund of funds, Lennertz plans to invest in eight to ten blockchain-focused venture capital funds, some in Europe but the majority in the United States. Tiedt said Lennertz raised enough capital to invest in two funds, Polychain’s and Bain Capital’s. crypto fund.
While some traditional investors have stayed away from the often radioactive sector, which faces constant onslaughts of regulatory issues and constant price fluctuations, Tiedt said Lennertz’s base of about 40 families — which she described as being mostly entrepreneurs – supported his investment thesis. The returns probably don’t hurt, with the two initial funds both boasting an internal rate of return of 35% per year.
Tiedt said blockchain represents about 10% to 12% of the company’s overall investments.
Lennertz is not the only crypto fund raising new capital. In September, Fortune reported that Accolade, a US-based fund of funds, had raised $135 million across two vehicles and would likely continue marketing. Hack VC, one of Lennertz’s portfolio funds, also raised $77 million.
The cryptocurrency sector may still be far from its peak in 2021, but dry powder is starting to accumulate on the sidelines.
