Cryptocurrency-based trivia games, non-fungible horse racing tokens, and privacy specialists are all part of a large and growing digital asset empire that media-shy hedge fund billionaire Alan Howard has been quietly building.
Howard is an influential figure in the hedge fund industry thanks to the success of Brevan Howard Asset Management, the $23 billion macro trading firm he co-founded. However, in recent years he has slowly left some of his roles at the firm to become a major force in crypto venture capital in both Europe and the US.
The FT has compiled a list of 43 Howard’s investments in crypto companies and projects – from well-known companies like exchange FTX to a start-up incubator and smaller NFT projects – based on information from venture capital databases Crunchbase, PitchBook and Dealroom and public announcements.
Howard has made his investments over the past five years, sometimes alongside US wealth manager Tiger Global, Japanese tech group SoftBank and venture capitalist Peter Thiel.
“It looks incredibly random until you put it on a card, and then it looks incredibly strategic,” said an executive at a crypto company who worked with Howard. “He wants to be involved in all facets of the industry.”
Howard’s interest in cryptocurrencies began in 2017, according to people who have worked with him, and he has continued to invest in the sector despite the wild ups and downs of the market.
“He has a 10 to 15 year vision. While everyone was going out, he ran in,” the executive said of Howard’s decision to continue investing in companies during the 2018 crypto bust. The pace of these investments has accelerated over the past two years and has continued despite the brutal sell-off of recent months.
Howard, who declined to be interviewed for this article, has a lower profile than other big crypto investors like Galaxy Digital’s Mike Novogratz. However, he has invested in projects alongside Galaxy, including the exchange Bullish Global and Derby Stars, which describes itself as “a horse racing metaverse game” where players can breed, grow, build and trade.
Industry leaders say the breadth of Howard’s investment portfolio makes him a key force in the industry alongside Galaxy and Connecticut-based crypto conglomerate Digital Currency Group.
“They have very big ambitions when it comes to crypto,” said a crypto investor who has worked directly with Howard.
Howard has rarely spoken publicly about his hedge fund or crypto investments, although he did comment in an email interview published by crypto news site The Block in May.
Howard said crypto is “an important macro trend,” but since digital assets are still a rather new asset class, “it’s wisest to invest across the crypto ecosystem in a highly diversified way.”
Hedge funds have taken an increasing interest in crypto investing in recent years, with its tremendous growth and returns drawing attention from an industry that has struggled at times to make money over the past decade. Many hedge funds have also started trading crypto for this reason.
“While we are seeing a number of macro investment managers launching or considering launching a crypto fund. . . Alan Howard has invested more broadly, publicly and directly in the digital asset ecosystem, including middle and back office services and digital asset platforms,” said Quentin Thom, co-head of perfORM Due Diligence Services.
Howard, who married at a lavish event on the shores of Lake Como last month, stepped down from some of his hedge fund roles in 2019 when he handed over the position of Brevan Howard’s chief executive to chief risk officer Aron Landy. although he still controls the company, according to official records.
This comes as Brevan Howard bounced back strongly from a long string of poor performances when the company’s master fund, which had never suffered a bad year before, lost money in three out of four calendar years between 2014 and 2017, and the company’s net worth plummeted from $40 billion up to $6 billion.
Last year, Howard repaid outside investors into the AH fund he personally manages, which made huge gains from the Italian bond shock in 2018. Although he continues to have a trading book as part of the master fund, he rarely trades, those familiar with the firm said.
However, he is still an active participant in Brevan Howard’s $1 billion digital assets fund. “Alan is so focused on digital assets,” said one hedge fund investor.
A person familiar with Howard’s view said he was “strongly involved . . . in a variety of initiatives at Brevan Howard, including co-investments, strategy allocations and the crypto business through BH Digital.”
Howard told The Block in May that “BH Digital reflects my belief in the importance of investing in a diversified and well-risk-managed manner across the entire ecosystem, regardless of instrument.”
His willingness to buy crypto assets is in direct contrast to some other investors who have preferred to buy stakes in companies involved in the crypto sector.
Howard said that venture capital funding and direct investment in crypto tokens and currencies should be considered together, as crypto projects often go public very early in their existence by selling tokens to investors.
With his venture capital investments, the list of deals also shows that in most of the crypto categories Howard invests in, he tends to back more than one company and the market as a whole.
For example, he has invested in at least three exchanges and three custodians, companies that store digital assets for clients. He has also backed companies developing crypto trading and portfolio management software, as well as several mutual funds operating in the digital asset space.
Other notable parts of its crypto portfolio include Elwood, a trading software company, startup incubator WebN Group, and Coremont Digital, the crypto-focused division of the back-office company that emerged from Brevan Howard. All three share a central London building with Brevan Howard.
Away from the companies providing crypto market infrastructure, Howard has also made more niche investments. In November, he invested in a fundraiser from Iron Fish, a developer working on technology to enable fully private cryptocurrency transactions.
Howard is known for his long-term approach, but his crypto portfolio has seen a few exits. Newcastle-based crypto payments company Bottlepay was sold to US crypto group NYDIG last year, while institutional trading platform Omniex was acquired by the Winklevoss twins’ Gemini group in January.
Howard’s personal stake in Elwood fell as the company raised $70 million in outside investment from lenders including Goldman Sachs and Barclays, which is valued at around $500 million. He did not participate in the round but remains the majority owner.
Also known as an art collector, he is interested in ‘generative’ digital art, which has its roots in 1960s computer art. He promotes the sector through a monthly digital art salon in London.
While the current market downturn has put off many would-be crypto investors, it presents opportunities for patient, well-funded investors like Howard.
“I think he knows what he’s doing. He works with the brightest in the crypto industry and is very well advised,” said the investor who worked with Howard.
“I wouldn’t be surprised if he showed up on the other side of this bear market as one of the biggest players alongside Galaxy. He is positioning himself to benefit from valuations.”