Old Street Digital, a London-based crypto asset manager, is attempting to raise institutional capital for its sub-$10 million fund. OSD Chief Investment Officer, Gary Clarke, formerly headed up the traditional finance giant, BlackRock’s, global equity team, which oversaw a team of portfolio managers running more than $30 billion between 2014 and 2016. The firm has assembled a team of investment veterans used to trading or overseeing back and middle-office operations with experience in the crypto sector, having worked for firms such as Nomura, Boston Consulting Group, and Invesco. Its $2.8 million seed round in August 2022 was led by Draper Associates and included investors from Europe, Asia, and the US, plus senior executives from the UK asset management industry. OSD’s “Old Street Digital Crypto Cash Management Solution” strategy has delivered a gross annualized return of 11.7% from inception in Q4 2022 through to the end of February 2023, targeting an 8 to 15% annual return by making stablecoin investments across DeFi protocols. The team has operational capital from its seed round and is projecting patience in terms of raising serious institutional dollars, having recently enlisted the help of perFORM Due Diligence to review its operations and trading functions.
Despite being an institutional-grade firm with a team of deeply credentialed investment veterans, OSD is struggling to raise external money. Although the digital asset markets have stabilized and bounced back from near historic lows in the fourth quarter of 2022, raising institutional capital has evidently not been easy. OSD has been pushing to raise the kind of external money its team is accustomed to, according to confidential firm marketing materials obtained by Blockworks and United Kingdom FCA regulatory records. Even with some of the biggest names in the investment industry backing OSD, the firm is still struggling to secure serious dollars and pounds from pension advisors, top family offices, and endowments.
Old Street Digital was named after the historic mile stretch of London that has been a hotbed of hedge fund traders and their courting service providers. The firm doesn’t need publicity and doesn’t seek it out, and despite having no shortage of brand name backers behind it, it shouldn’t have such a tough time raising serious institutional dollars. With $10 million under management, OSD is a small sum compared to industry native players like Pantera Capital, Grayscale Investments, or Galaxy Digital.
In an exclusive interview with Blockworks, Old Street CEO, Paul Ridley, said that the crypto industry is “still in the super early days” when it comes to the level of limited partner dry powder that has fueled the rise of traditional finance fund managers for decades. Ridley’s team is playing the long game in an industry that has been beset by a lack of traditional finance understanding and regulatory hurdle after hurdle. Ridley said that he and his team wanted to build a “really reputational product that would be the sort of thing that BlackRock would build, that T Rowe [Price] would build,” the kind of clear, focused product that institutions should be buying – pension funds, endowments, sovereign wealth funds.
Asked the difference between an institutional investor in traditional finance and an institutional investor in digital assets, Ridley said that his London financial circle “have been talking about exactly that” on and off in 2023. “No one knows what a real institutional investor is in this space — still,” he said.
Regulatory challenges and limited understanding by traditional finance players have been a significant roadblock for institutional investors looking to invest in digital assets. However, with more institutional-grade infrastructure and products being developed in the crypto space, the entry barriers for institutional investors are slowly lowering.
As for Old Street Digital, the firm is optimistic about its future in the crypto industry. According to Ridley, the firm plans to continue building its reputation as a reputable and trusted player in the industry, similar to the likes of BlackRock and T Rowe Price. With a team full of highly experienced traditional finance veterans, Old Street Digital believes it has the right approach and expertise to succeed in the crypto industry.
In conclusion, Old Street Digital, led by former BlackRock executive Gary Clarke, has been assembling a team of highly experienced traditional finance veterans to build a reputable and trusted crypto asset management firm. Despite facing challenges raising institutional capital, the firm has secured a $2.8 million seed round and continues to build out its product offerings. With institutional interest in digital assets growing, Old Street Digital is poised to take advantage of this trend and establish itself as a major player in the crypto industry.
