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Understanding the Crypto Fund Ecosystem
Suitable only for professional investors
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@autonofintech
https://next.autonomous.com
2
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About
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@autonofintech
https://next.autonomous.com
4
Who is Lex Sokolin?
Fintech Director,
Autonomous
Research
Entrepreneur,
NestEgg,
AdvisorEngine
Lehman
Brothers PTSD
New media
visual artist
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@autonofintech
https://next.autonomous.com
5
What is Autonomous Research?
• Global Equity Research firm
founded in 2009
• Focused only on Financial Services
• Banks
• Insurance
• Investment Management
• Payments
• Exclusive to world’s
leading financial institutions
• Entirely independent and partner-
owned
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@autonofintech
https://next.autonomous.com
Autonomous NEXT brings together a fundamental cash-
flow view with an innovation growth lens
6
-
Here’s What Matters
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@autonofintech
https://next.autonomous.com
10 Years of Production Software, 3 Core Themes
Global Macro Trade Consortia cost cutting Smart Digital Assets
2008+
$7 Trillion
Low Probability
2014+
$500 Billion – 1 Trillion
High Probability
2015+
All Economic Activity
Starting Now
8
Bitcoin Cryptocurrency Born
Blockchain Distributed Ledgers Focus
Decentralized
Apps
Source: Autonomous Research
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@autonofintech
https://next.autonomous.com
What’s so special anyway?
Source: Pexels
Reality
• Physical & Scarce
• Economic Activity
• Pay for product
DotCom
• Digital & not Scarce
• MC = 0
• Free (pirated) or Pay
for Convenience not
IP (stream)
Crypto
• Digital & Scarce
• Economic Activity
• Pay for Product
-
@autonofintech
https://next.autonomous.com
Digital Asset scarcity enables everything from digital cats to
digital equities, derivatives, currencies or other tokens
10
• Ownership of token on blockchain
• Smart contract performs programmed functions
• Network validates and plays various roles
• Mistake to dismiss as today
• These projects were less
than 6 months apart,
what’s next?
Source: Crypto Kitties, Polymath network
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Macro View on Asset Class
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@autonofintech
https://next.autonomous.com
179 437 209 345
646 547 14 66 364 245
417 115 26 8
225
6,050
3,486
0.2B 0.5B 0.6B
0.8B
7.1B
4.1B
2013 2014 2015 2016 2017 2018 YTD
Other Early Stage Investors
Corporate Venture
ICO
March to Date has seen $3.5 Billion in ICO funds, vs $6.B
for last year, showing moderate slowing
12
Investment in Crypto-Economy ($mm)
Source: Autonomous NEXT, Various for ICO, Pitchbook for VC
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@autonofintech
https://next.autonomous.com
... if you ignore Telegram and EOS.
13
Investment in Crypto-Economy ($mm)
Source: Autonomous NEXT, Various for ICO, Pitchbook for VC, EOS Scan
179 437 209 345 646 547 14 66 364
245
417 115 26 8 225
6,050
3,486
794
1,643
1,700
0.2B 0.5B 0.6B
0.8B
7.9B 7.5B
2013 2014 2015 2016 2017 2018 YTD
Other Early Stage Investors
Corporate Venture
ICO
Rolling EOS
Telegram
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@autonofintech
https://next.autonomous.com
2
2 275 182
19
23
1,310
457
7
1
9
373
92
2
876
416
166 371
314
5
6
809
367
1,217
945
6
320 447
12 499 267
2014 2015 2016 2017 Up to 03/18
Media & Social
Gaming & Gambling
Internet of Things & People
Finance: Markets
Finance: Investments
Finance: Banking & Payments
Cloud
Core Tech
Cryptocurrency
26M 8M 225M 6.1B 3.5B
Increasing importance of apps and vertical use cases, not
just fat protocols
14
• All Initial Coin Offerings by Industry (USD Equivalent, $1M+ raises)
Source: Autonmous NEXT
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@autonofintech
https://next.autonomous.com
10%
100%
1,000%
10,000%
100,000%
1,000,000%
05/97 05/99 05/01 05/03 05/05 05/07 05/09 05/11 05/13 05/15 05/17
Amazon Marketcap Indexed to IPO
Netf lix Marketcap Indexed to IPO
NASDAQ Composite
898
128
595
175
IPOs between 1997 and 2000
Reduction by 2005
Reduction by 2010
2010 YE
The Dotcom bubble teaches a valuable lesson – most new
ventures die, but survivors become winners that take all
15
Tech Company Initial Public
Offerings (‘97-2000)
Source: Autonomous NEXT, Bloomberg data, McKinsey
Performance of Dotcom Survivors
(logarithmic, indexed to IPO date)
Marketcap grew from $429MM
to $475B, over 1,000x
Marketcap grew from
$320MM to $70B, over 225x
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Macro View on Investors
-
@autonofintech
https://next.autonomous.com
5 3
128
20
175
26
Prior 2013 2014 2015 2016 2017 2018
Credit
Fund of Funds
Index
Token Basket
AI / Quant
Trading
Liquid Venture
Institutional investors with broad strategies
Crypto Funds by Inception Year and
Strategy (April 2018)
Source: Autonomous NEXT
Fund of
Funds
Legal wrapper
Fat fees
Index Passive beta
Small, mid, large
Token Basket Token of tokens
Manager selection
Quant Arbitrage
Machine learning
Trading Technical charts
Market movement
Venture MV=PQ
Team + Narrative
-
@autonofintech
https://next.autonomous.com
Decentralized but not equally distributed
18
0%
20%
40%
60%
80%
100%
120%
15110115120125198
52%
73
20%
21
15%25
4%23 4%
9 5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Number % of Funds
Fund of Funds
Token Basket
AI / Quant
Index
Trading
Liquid Venture
249 AUM %
Crypto Fund by Strategy (April 2018) AUM Distribution (April 2018)
• Top 50 funds hold 77% of known AUM
• Top 10 hold 37%
• 75% of funds are lurkers
$3-5 Billion
in Total
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@autonofintech
https://next.autonomous.com
Crypto funds are tiny compared to asset class opportunity
19 Source: FT, CBOE, Coinbase
Exchanges
Custody
Products
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@autonofintech
https://next.autonomous.com
$36 trillion of Wealth in US ($70 trillion Globally), $400B
Revenue Pool
20
US Wealth Management Industry
Source: Autonomous Research, Investment Company Institute 2016, State Street 2015, World Wealth Report 2016
88.4
$5.6 $70.0
13.8
$2.6 $29.9
15.9
$8.5 $89.3
6.3
$16.9 $160.6
0.2 $3.2 $27.2
Households Investable Assets ($T)
Revenue ($B)
10mm+
$1mm-10mm
$250k-1mm
$100k-250k