Marc Serafino
TechCrunch founder Michael Arrington always had a nose for disruption, with its online outlet breaking many tech stories in the past decade.
Now the same guy who witnessed the meteoric rise of Silicon Valley is turning his attention to cryptocurrencies, with the newly announced $100 million hedge fund that will buy and hold crypto assets, while also making investments in token sales, and some equities and debt.
The new venture, called Arrington XRP Capital, will require all limited partners (LPs) to make investments in XRP, which is the cryptocurrency that powers Ripple’s RippleNet. Moreover, the fund will also use XRP for all distributions and fees.
The next chapter
Arrington says the fund is the next phase of his career, one that has already seen him found TechCrunch, as well as CrunchFund, a venture fund with 55 exits to date.
“In the last several months, I’ve gone from crypto enthusiast to 100 percent crypto. I’ve only been looking at crypto deals,” he told CoinDesk. “This is what I think I’ll be doing the rest of my career.”
He went to add his belief that the current $300 billion cryptocurrency market represents only the beginning of a larger and more diverse ecosystem of assets.
“I seriously think that we’ll be in the trillions next year, and that we’ll start to see institutional money,” he said. “I think next year you’ll see significant gains.”
In addition to Arrington, the team also includes Heather Harde, a former CEO of TechCrunch, as well as two other unnamed partners. So far, the fund has $50 million committed, with the rest planned to be closed by the end of the year.
Not the fund for everyone
Cryptocurrencies have their critics and it is only obvious that not everyone is/will be interested in Arrington’s fund. He acknowledges that, noting that he is targeting a more specialized demographic of existing cryptocurrency investors. Namely, he is looking to attract the “large number” of wealthy individuals with already significant holdings in the market, as opposed to the new buyers enticed by the rising values of bitcoin and other cryptocurrencies.
“If they want to invest in a hedge fund, they have to convert to fiat, then the hedge fund will convert it into crypto for investments. With this, you can do a quick swap,” he said.
Ripple’s XRP could improve how the fund works
Arrington believes that the use of Ripple’s XRP token would improve on the existing cryptocurrency hedge fund model.
For instance, he said, such hedge funds typically take investments in fiat currencies, only to convert them to bitcoin or ether in a new cryptocurrency launch.
Another reason for using XRP is that it makes for virtually instant transactions, and the only downside is [potential] volatility against fiat currencies.
Arrington also said he hopes the fund’s size will encourage a further diversification of cryptocurrency use in the token sales that often bootstrap these efforts. He framed the market as overly reliant on bitcoin and ether, and his fund as one that is staking its claim on a solution.
“I think investors are maybe heavier in bitcoin and ether than they should be,” he concluded.
