Michael Bodley

CF Private Equity, which counts US endowments and foundations among its limited partners, is rolling out a blockchain-specific fund.



The firm, known as Commonfund Capital prior to a rebrand at the beginning of this year, has hinted at its crypto interests since 2018.&nbsp;



But CF Private Equity, according to an <a href="https://blockworks.co/tag/sec">SEC</a> filing from the beginning of August, is preparing to launch what appears to be its first fully digital asset private equity venture.The move is perhaps the most telling indicator yet of the firm’s crypto ambitions.&nbsp;



The fund, CF Blockchain Ventures LP, was designated on the filing as a private equity fund, not a venture capital fund. The firm oversees a mix of venture capital and private equity investments.&nbsp;



The vehicle’s filing indicated an expected fundraise of $100 million, but it’s possible the disclosed figure only pertains to the fund’s first close. A spokesperson for the company declined to comment when reached.



The outlook for institutional crypto-related <a href="https://blockworks.co/tag/funding">fundraising</a> this year has been mixed. Spot digital asset markets have bounced back since the lows seen in 2022’s fourth quarter. Yet traditional financial institutions — mulling investments and preparing due diligence last year — opted to pause for extended periods.



In that context, the foray by Connecticut-based CF Private Equity represents a shift of sorts. The private equity affiliate, as well as its parent company, have for years invested in a mix of traditional real-world assets and equities.



When it comes to fundraising for CF Blockchain Ventures LP, the firm has tapped Commonfund Securities, a broker-dealer also under the auspices of its parent company, as well as a Japanese and a Chilean bank.&nbsp;&nbsp;



CF Private Equity is a wholly owned subsidiary of Commonfund, an asset manager that also operates an outsourced chief investment officer service, designing customized portfolios and so-called funds of one for institutional investors.&nbsp;



Commonfund got its start managing money for US nonprofits but has since expanded to working with sovereign wealth funds, for-profit pensions and family offices.&nbsp;



The company invests capital in outside managers via its alternatives fund-of-funds setup. The private equity affiliate is led by president and CEO Mark Hoeing, who previously worked for Deutsche Bank. The business also engages in direct investing and co-investments, and it is active in the secondary market.&nbsp;



CF Private Equity has booked approximately $22 billion of committed capital since its inception.&nbsp;



According to its website, CF Private Equity has completed more than 10 blockchain investments since 2018 in a bid to “construct portfolios of high quality blockchain specialist managers.”



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CF Private Equity is building a blockchain fund

Cryptocurrency-focused investment firm CoinFund has bifurcated its in-house legal team, betting on one incoming attorney to drive portfolio company deals and keeping in place the business’ general counsel to oversee more traditional functions.



Maintaining two attorneys at an executive level isn’t exactly commonplace among crypto fund operators — even ones running both liquid and illiquid venture capital strategies.&nbsp;



CoinFund’s recent hire of Dilveer Vahali in the newly created position of head of venture legal represents the firm’s bid to draw a line in the sand between the business needs of both verticals.&nbsp;



Vahali last worked for the Chermin Group, a private investment firm that counts crypto companies on its funded list, and before that spent time as a partner at Kirkland &amp; Ellis LLP, where he worked with private equity firms and merger and acquisition initiatives.&nbsp;



It appears, though, that <a href="https://blockworks.co/tag/coinfund">CoinFund</a> General Counsel Stewart Eichner, who also holds the title of chief compliance officer, is set to continue to play a role in operations across CoinFund’s business lines.&nbsp;


<div class="wp-block-image">
<figure class="alignright size-medium"><img loading="lazy" decoding="async" width="480" height="480" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/08/Dilveer-Vahali.png?w=300&amp;h=300" alt="" class="wp-image-63739" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/08/Dilveer-Vahali.png?w=480 480w, https://blockworks-co.imgix.net/wp-content/uploads/2023/08/Dilveer-Vahali.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/08/Dilveer-Vahali.png?w=150 150w, https://blockworks-co.imgix.net/wp-content/uploads/2023/08/Dilveer-Vahali.png?w=257 257w, https://blockworks-co.imgix.net/wp-content/uploads/2023/08/Dilveer-Vahali.png?w=261 261w, https://blockworks-co.imgix.net/wp-content/uploads/2023/08/Dilveer-Vahali.png?w=219 219w, https://blockworks-co.imgix.net/wp-content/uploads/2023/08/Dilveer-Vahali.png?w=80 80w" sizes="(max-width: 480px) 100vw, 480px" /><figcaption class="wp-element-caption">Dilveer Vahali, courtesy CoinFund</figcaption></figure></div>


Vahali at CoinFund has been tasked with “being the deal guy,” he told Blockworks, intending to blend his experience from the competitive world of closing large scale private equity transactions with a crypto-native approach. Private equity investing has a more established set of norms around legal needs and compliance, he said, including differentiating between in-house and external counsels.&nbsp;



“In traditional private equity, you have the legal folks, the general counsel, the folks who are managing the legal processes,” he said. “In crypto, and because CoinFund is evolving so quickly, it was kind of to fill this hole with somebody who can take deal execution back from the business team and oversee our portfolio companies and be a sounding board when they have questions.”



CoinFund, which operates venture capital funds and a liquid hedge fund that invests in tokens, <a href="https://blockworks.co/news/investment-firms-dominate-week">recently raised $158 million for a new venture fund</a>, Seed Fund IV, capping off a steady year in which the firm appeared to have avoided a number of the missteps of its competitors through choppy markets and whipsawing venture valuation.&nbsp;



<h2 class="wp-block-heading">Portfolio companies looking for legal help</h2>



This year, the firm&#8217;s executives, including President Chris Perkins, have also engaged in discussions concerning the US regulatory landscape, advocating for stablecoin legislation and other key initiatives.



Read more: <a href="https://blockworks.co/news/coinfund-president-crypto-regulation">‘Safe harbor’ proposal resurfaces in CoinFund president’s call for crypto laws</a>



Vahali said his role combines legal needs with business functions, with the aim being to provide portfolio companies with the means and know-how to quickly close on new business opportunities. It’s also intended for the attorney to be available as a legal sounding board for companies, often operators too nascent and without the capital to justify shelling out on their own legal expertise.&nbsp;



“It’s even less of us telling [portfolio company founders] what to do,” he said. “A lot of the companies we invest in are early stage, so just having a lawyer that they can talk to, it’s like, ‘Hey, I got a call the other day about credit card processing in the United States from a foreign business.’ They are like, ‘Do you know folks who can do that?…What’s the process?’”



Managing Partner David Pakman, CoinFund’s head of venture investments, pushed for the creation of the firm’s venture legal role, citing increased deal flow, in part, for the new position.



CoinFund has invested in more than 100 crypto companies, many of them early-stage, including <a href="https://blockworks.co/news/defi-sector-raises-50m">backing in June the $10 million seed round of Neutron</a>, a <a href="https://blockworks.co/category/defi">DeFi</a> blockchain protocol.&nbsp;



With crypto markets continuing to bank on a continuing recovery this year, Vahali said he’s noticed an uptick in merger and acquisition activity as of late.&nbsp;



“What I can tell you from my vantage point is I have seen activity pick up, and I’ve seen more founders coming to us, more potential deals coming in,” he said. “I still think it’s not where it was in 2021, when we were going gangbusters, [which then] flushed out a lot of folks who maybe weren’t in crypto for the right reasons.”



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CoinFund taps ‘deal guy’ as first head of venture legal

<div id="highlights-block_61eb120ab820c" class="highlights">
 <ul>
 <li>Although valuations for private crypto companies are sky-high, investors continue to pour money into venture capital funds</li>
 <li>The firm plans to cut off contributions to the new fund at $40 million, sources said</li>
 </ul>
 
</div>



Crypto hedge fund firm Ikigai Asset Management is launching its first venture capital fund on the back of strong investor demand, according to two sources familiar with the matter.



The firm had previously been taking private blockchain stakes in its flagship Ikigai Opportunities Master Fund via <a href="https://www.investopedia.com/terms/s/sidepocket.asp" target="_blank" rel="noreferrer noopener">side pockets</a>, or seperate accounts for illiquid assets. Ikigai, run by founder and chief investment officer Travis Kling, initially set out to raise $20 to $30 million for its inaugural venture capital fund.&nbsp;



Investor demand, however — Ikigai marketed the fund exclusively to existing limited-partners — led the firm to cap the oversubscribed fund at $40 million. The vehicle would likely launch sometime this quarter.&nbsp;



Sources were granted anonymity to discuss sensitive business dealings. Kling declined to comment.&nbsp;



<h3 class="wp-block-heading">“Outstanding” track record</h3>



Kling has hit on a number of past private investments via Ikigai’s flagship fund, with one family-office investor calling his track record on such plays “outstanding.”&nbsp;



The firm has been investing in venture assets since at least 2019, when Ikigai contributed to a <a href="https://www.finsmes.com/2019/07/digital-assets-data-closes-3-2m-in-equity-funding.html'" target="_blank" rel="noreferrer noopener">$3.2-million raise</a> for Digital Assets Data.&nbsp;



Valuations for private digital assets deals have been soaring recently, but many industry participants don’t expect much of a downturn.



“We keep seeing more and more money coming in, and valuations growing, and rounds becoming higher and higher,” said one crypto hedge fund manager who asked not to be named.&nbsp;



Ikigai’s limited-partners include asset managers and funds-of-funds. Its overall assets under management aren’t publicly available.&nbsp;



In an <a href="https://www.kanaandkatana.com/blog/january-2022-market-update" target="_blank" rel="noreferrer noopener">annual review letter</a>, Kling called 2021 a “spectacular” year for crypto. Huge gains were driven in part, though, “by exceedingly accommodative monetary and fiscal policies,” according to Kling — who added that’s set to change this year.&nbsp;



“The future couldn’t be brighter. But it’s also still highly uncertain,” he wrote.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“It is far from set in stone whether this technology and asset class will deliver on all of, some of, or none of its potential to make the world a better place,” Kling said.</blockquote>



Prior to co-founding Ikigai, Kling worked as a portfolio manager for Point72 Asset Management. Before that, he spent time at the energy-focused asset manager Magnetar Capital.&nbsp;



Ikigai’s chief executive officer is Anthony Emtman, who previously worked for video-focused company <a href="https://studio.jogg.co/">Jogg</a>.



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Exclusive: Crypto Hedge Fund Ikigai Tests Venture Capital Waters

Jacquelyn Melinek

<div id="highlights-block_615516705df87" class="highlights">
 <ul>
 <li>KKR joins a list of other LPs invested in ParaFi, including allocators across Silicon Valley, Wall Street, family offices, institutional fund of funds, venture funds, crypto founders and companies</li>
 <li>KKR is a global investment firm with a market capitalization of over $53 billion</li>
 </ul>
 
</div>



Private equity firm KKR &amp; Co. has invested as a limited partner in ParaFi Capital’s flagship fund, a source familiar with the matter told Blockworks.&nbsp;



KKR is a global investment firm with a market capitalization of over <a href="https://www.bloomberg.com/quote/KKR:US" target="_blank" rel="noreferrer noopener">$53 billion</a>. It manages multiple alternative asset classes, including a private equity <a href="https://www.kkr.com/businesses/private-equity/kkr-portfolio" target="_blank" rel="noreferrer noopener">portfolio composed</a> of 109 companies that bring in about $244 billion in annual revenues. As of June 30, 2021, the firm has over $429 billion in assets under management, according to its website.&nbsp;



The three-year-old ParaFi Capital manages about $1 billion and focuses on decentralized finance and blockchain technology. Its website states ParaFi Capital invests in digital assets that “address tangible use cases, demonstrate signs of product-market fit, and exhibit compelling cryptoeconomic models.”



KKR joins a list of other LPs invested in ParaFi Capital, including allocators across Silicon Valley, Wall Street, family offices, institutional fund of funds, venture funds, crypto founders and companies. ParaFi Capital’s investors also include venture capital firms Bain Capital Ventures and Galaxy Digital Ventures as strategic partners.



Ben Forman, the founder of ParaFi, has close ties to KKR, having spent time there leading research internally on blockchain before leaving to launch ParaFi in 2018, the source said to Blockworks, adding that the DeFi space is at an inflection point and there is growing adoption of blockchain technology and DeFi among institutional investors.



Both KKR and ParaFi Capital declined to comment when requested by Blockworks.&nbsp;



In 2019, it was <a href="https://www.bloomberg.com/news/articles/2019-06-28/kkr-s-kravis-invests-in-his-former-credit-analyst-s-crypto-fund" target="_blank" rel="noreferrer noopener">reported</a> that Henry Kravis, co-founder of KKR, invested in the flagship fund for ParaFi Capital. However, a spokesperson for Kravis declined Bloomberg’s requests to comment at the time.&nbsp;



In general, the crypto space has seen a huge influx of funding from traditional venture capital and private equity firms looking to dive into the digital asset world. In the first quarter of 2021, over $3 billion was allocated into crypto investments up 150% from $1.2 billion in the previous quarter, according to <a href="https://pitchbook.com/news/articles/crypto-startups-post-record-quarter-as-opportunities-abound" target="_blank" rel="noreferrer noopener">data</a> from Pitchbook.



With that said, KKR joins a list of other investors and venture capital firms, like Andreessen Horowitz (a16z)&nbsp; which created a <a href="https://cms.blockworks.co/andreessen-horowitz-launches-2-2b-crypto-fund/" target="_blank" rel="noreferrer noopener">$2.2 billion crypto fund</a> back in June, that have heavily invested in crypto-related companies this year.