Digital Assets: Quant-Crypto Fund Cambrian Lands $4.2M

Marquee investors include Renaissance Technologies and First Round Capital co-founder Howard Morgan.

Quant crypto fund manager Cambrian Asset Management has raised $4.2 million in a seed equity round, the firm said Thursday. The round’s target was initially $3 million but was increased following oversubscription.  (Vator)

Cambrian will use the funds to enhance its technology infrastructure, operations, and research and development. The money will not form a part of its AUM.

Solid, quant-based returns

Cambrian said in a statement that it spent the last three years studying and refining its quantitative strategies regarding digital assets. It invested “live” capital effective November 2018.

It claimed that its strategies “have generated returns that are over 11x higher than a digital asset passive index while suppressing downside volatility by greater than 75%.”

Therefore, these returns indicate the potential for substantial inflows in the future. According to Coindesk, Cambrian currently manages $25 million.

Unsurprisingly, the seed round received an enthusiastic response, including from some of the “Who’s Who” of investors in the technology and financial spaces.

Investors participating in the seed round

Lead equity investors include Howard Morgan, co-founder of Renaissance Technologies and First Round Capital; Tano Capital, the family office of the founding family of Franklin Templeton Investments; Dennis Phelps, General Partner, IVP; and Kevin Ryan, co-founder, MongoDB & Business Insider.

Other equity investors in Cambrian’s seed round include current or former senior principals from Airbnb, BNP Paribas, The Carlyle Group, DRW & RGM Advisors, Fastly, First Round Capital, Founders Circle Capital, Goldman Sachs, Google, Instagram, Microsoft, Pinterest, SAC Capital, Standard Pacific Capital, Tata Capital, UBS, Winton Capital, as well as angel investors in Coinbase and Uber.

Digital assets now attractive to accredited investors

Digital assets, as well as Cambrian’s quant-based investing strategies, are likely to attract investors. Accordingly, the firm is now wooing clientele such as institutions and family offices.

“We are very early in the development of the digital asset market,” said Martin Green, Co-CIO and CEO of Cambrian. “Notwithstanding, we are encouraged by the exceptional opportunities we see by combining a data-driven, quantitative approach with rigorous risk management.”

The firm said it intends to build on a first-mover advantage in order to “compound capital at an exceptional rate,” by trading liquid digital assets, including bitcoin and ether. This it will do using its proprietary data-driven probabilistic models, rigorous risk management systems, and automated trade execution capabilities.

Uncorrelated returns

The returns from the fund under management are likely to have a very low correlation to equities and other traditional asset classes.

Kevin Ryan, co-founder, MongoDB & Business Insider, who invested in the seed round, said more investors are starting to look at digital assets because of their scarcity, as well as “the value created by innovation that is orthogonal to the equity and credit markets.”

Related Story:    Hong Kong’s SFC Greenlights Arrano’s Bitcoin-tracking Fund

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