Goldman Sachs and Barclays have invested in Elwood Technologies, the cryptocurrency trading platform founded by British hedge fund billionaire Alan Howard, in a fresh bet on the mainstream adoption of digital assets.
The two banks invested alongside venture capitalists Dawn Capital and the venture divisions of German lender Commerzbank and Galaxy Digital, US billionaire Mike Novogratz’s crypto financial group. The round, Elwood’s first outside fundraising, valued the six-year old company at roughly $500mn, according to people familiar with the terms.
Elwood is counting on traditional financial institutions — from hedge funds to banks and family offices — ploughing more money into digital assets despite the sharp fall in crypto assets prices. The market value of the top 500 digital assets is down by more than half from their highs last year, according to CryptoCompare data collated by the Financial Times. Bitcoin on Tuesday dropped below $30,000 for the first time since July.
The Elwood funding round was agreed before the latest weekly downward slide. Founded as a vehicle to manage Howard’s personal crypto fortune, the company provides market data and trading infrastructure to big investors in digital assets.
Chief executive James Stickland shrugged off the drop and called the fundraising “another validation of the longevity of crypto”.
“We’re getting investment from financial institutions that aren’t expecting to get massive returns in 15 minutes. They’re investing in the infrastructure,” he said. “I think it’s a reassurance message.”
The $70mn fundraising cements a change of direction for Elwood, which as recently as 2019 was focused on asset management, planning to offer portfolios of crypto funds for institutional investors. Elwood now sells the tech that it developed in-house to manage its own crypto investments to other clients, said Stickland, who joined the company in 2020 to lead its drive to become a software provider.
“As institutional demand for cryptocurrency rises, we have been actively broadening our market presence and capabilities to cater for client demand,” said Mathew McDermott, global head of digital assets at Goldman Sachs. He added that the investment showed the US bank’s “continued commitment” to digital assets.
Elwood provides a tech platform akin to the Bloomberg terminal or BlackRock’s Aladdin portfolio management system, according to Stickland, which aims to plug into existing trading software at financial institutions to help them manage and trade their crypto portfolios.
In February, the company announced a partnership with Bloomberg to connect its software to the US trading platform’s order management system.
“Unless the infrastructure is there, and you get comfort around the quality of the underlying architecture, then you’re never really going to get the volume to match the opportunity,” said Stickland.
Elwood will remain majority owned by Howard, who had been its principal investor before the deal. The co-founder of the Brevan Howard hedge fund is one of the most prominent UK investors to take the plunge into crypto markets.