Parafi Capital Secures $120 Million for Investing in Crypto Funds

Parafi Capital Prioritizes General Partner Stakes

The New York-based digital asset manager, Parafi Capital, has raised $120 million to invest in or acquire general partner stakes in crypto funds targeting specific market segments, strategies, or geographic locations. Theta Capital Management and Accolade Partners are among a group of investors that participated in the funding round.

According to Bloomberg, Parafi Capital plans to build a portfolio of between 30 and 50 such general partner stakes. Founder Ben Forman is quoted as outlining the asset management firm’s strategy of prioritizing general partner stakes over other asset classes.

“GP [general partner] stakes are a growing asset class in traditional finance but haven’t existed at scale in crypto. We think they will. We’ve watched the crypto-fund landscape evolve closely over the years. We believe there will be many more crypto funds as institutional capital enters this space. It’s important to have specialization and focus, whether it’s across geography, theme or type of investment,” Forman reportedly said.

General partner stakes have become increasingly popular among venture capital firms because they align the interests of the general partner with those of the limited partners. Furthermore, venture capital firms also prefer general partner stakes because they often come with performance-based features, such as carried interest.

Before the latest capital raise, Parafi Capital, which is backed by KKR & Co. co-founder Henry Kravis, had invested in nine asset managers using internal reserves. With new funding now available, Parafi Capital is expected to increase the number of asset managers under its portfolio.

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