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Marcos Veremis

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2022-06-13
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2022-06-13
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  1. “There were some generalist VCs who were leading or starting to lead some of the crypto investments in these funds who had decided to leave and do it on their own, like Alex Pak, for example, at Bain Ventures. There were dropouts out of college. There were people dropping careers from tech and finance, operators. I think this was an open field of opportunity. And at the time, it was open to everyone and the design space was massive. So you had people from all walks of life. With that said, there was also the electric capital folks that had strong angel track records and had been investing in the space really early on, personally. But back then, you know, you had much less information or concrete information to build out conviction on some of these funds. It was more about, I would say,”

    2022-06-13 · Capital Allocators · Marcos Veremis – Allocator's Perspective on Blockchain (EP.254, Crypto for Institutions 2, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “That is a great question. I think the best way to answer it is from the 2018 lens because you'll see where they came from. At this point, many of these guys are considered experts. They've been in the space for a while, made extraordinary returns, and nobody remembers or cares about their backgrounds. But back in 2018, when I was first meeting with several of these funds, outside of Polychain and Andreessen and Pantera and a couple of funds that were in the space really early, there were several folks who were just entering in 2018. And their backgrounds were all over the place. There was folks like Ben Foreman from Parafi Traditional Finance, right? KKR. There were entrepreneurs like Kylan Tushar in Austin. There were former early Coinbase employees. Olaf is one such case, but there were others that were emerging in 2018.”

    2022-06-13 · Capital Allocators · Marcos Veremis – Allocator's Perspective on Blockchain (EP.254, Crypto for Institutions 2, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “I would say there are about fifteen to twenty at this point, with maybe 10 being. elite elite like Liguan, at least in the perceptions of people, I do have to say though that some of these elite firms of 2016, 17, 18, 19 have also grown very large, and that's something noteworthy and important, because when you have a fund size of 100 million or 200 or 300, and then you have a fund size of a billion or more, It's a different ballgame you're playing. So I think that for the vast majority of these elite firms of 2018, 2019 have become substantially larger. So they're playing a little bit of a different ballgame at this point. That's something folks should be aware of, I think. There's nothing wrong with that, but I'm just saying it's a little different.”

    2022-06-13 · Capital Allocators · Marcos Veremis – Allocator's Perspective on Blockchain (EP.254, Crypto for Institutions 2, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “It is to try to invest in some of these elite blue chip managers. You know their track records, you know who they are. The entrepreneurs know them. They all mention the same people. And these folks are the ones that the institutional crowd are now investing in or trying to invest in because they're capacity constraint too.”

    2022-06-13 · Capital Allocators · Marcos Veremis – Allocator's Perspective on Blockchain (EP.254, Crypto for Institutions 2, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “There are two chapters here. There's today, and there's 2018. And these are very two different situations. Because today it's much easier to construct a portfolio than in 2018. Why is it much easier? Because at this point during the 2015-2019 period, you had this core group of what I would now call elite managers emerged in the space. There were very few managers back then. They went into an open space, an empty street, let's say, and they started funding all these startups. And they created these amazing track records. And fast forward to today, you know, obviously their network effects and moats around their early activity, and they're winning more deals. It's easier for them to win deals than new entrants on average. So all you need to do today, I think, or at least to a large extent, because they're a newcomer too.”

    2022-06-13 · Capital Allocators · Marcos Veremis – Allocator's Perspective on Blockchain (EP.254, Crypto for Institutions 2, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “It's quite different. When I was a researcher at Cambridge, I had this, first of all, unbiased, let's say, neutral view of the entire industry. I spoke with everyone gathered knowledge and tried to put it down on paper. I did obviously underwrite some managers, so I did have skin in the game in that sense, because when you underwrite managers and clients invest, you're ultimately responsible. But I think being on the principal side, number one, I have A lot of my own capital invested as a GP. Number two, I'm focused on 100% on constructing a portfolio here with a team, with a Tulanaram here, and day in, day out, we're trying to figure out what the best choices are and how to put a portfolio together. So I would say there's more skin in the game, in this role.”

    2022-06-13 · Capital Allocators · Marcos Veremis – Allocator's Perspective on Blockchain (EP.254, Crypto for Institutions 2, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “I think the vast majority of them are placing this in their venture capital allocations at this point. There are some who during the years have said should I put Bitcoin in my real assets allocation or should I put some of this stuff in the hedge fund bucket because some of these funds are open-ended even though they take a venture approach given the early liquidity of tokens. But I think at this point it is considered a sub allocation to venture capital by the vast majority of institutions. And it's just a much more volatile subset of venture capital because there's early liquidity. Portfolios start having marks. They go up and down. But people have become more comfortable with that, I think.”

    2022-06-13 · Capital Allocators · Marcos Veremis – Allocator's Perspective on Blockchain (EP.254, Crypto for Institutions 2, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “I don't have the info Cambridge would have it right now, but I would say there's probably 5x from then at least. Like I'm taking a guess here in terms of client number. In terms of dollars, probably 10x or 20x because what happened is initially there were very few people willing to do really small checks. Now there are more institutions willing to do larger checks. I think and from what we see here at Accolade, there has been a very substantial interest by institutions. And if you ask me why, I think the reason is that folks realize that this is really one of the fastest growing categories of technology and venture capital. It is extremely risky, but on the other hand, they have close to zero exposure to it. So I think it dawned on numerous institutions that they should have some exposure.”

    2022-06-13 · Capital Allocators · Marcos Veremis – Allocator's Perspective on Blockchain (EP.254, Crypto for Institutions 2, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “And a third commitment. By the time I left in 2020, there was a substantial amount of capital from Cambridge clients, but very small relative to the size of the firm. From what I see and hear today and from where I sit today, this has changed a lot. I mean, there's a lot of capital, institutional capital in the space today. But I'd say we underwrote five to six managers while I was there, and we had a dozen or so institutions invest.”

    2022-06-13 · Capital Allocators · Marcos Veremis – Allocator's Perspective on Blockchain (EP.254, Crypto for Institutions 2, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “Yeah, so initially it was just very, I would say limited interest from clients, right? I mean, it was back in 2018, if I look back, maybe 10 to 12 Cambridge clients on Cambridge has 1,000 clients or so or more. We're interested in potentially investing something in the space. So we started by underwriting a manager in the middle of 2018. That was the first crypto dedicated fund we did. It was a brand name. And that was an easy one for some of these guys to invest in as a first step. However, from 2018 to 2020, another two years that I was there at Cambridge, it started evolving and you went from brand names to crypto native managers that are now some of the blue chip names that people are investing in. You saw some institutions making a second call.”

    2022-06-13 · Capital Allocators · Marcos Veremis – Allocator's Perspective on Blockchain (EP.254, Crypto for Institutions 2, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “Spoke with some of the journalists VCs who had been investing in the space. And my belief was after speaking with all these folks that something important was happening and that we shouldn't be dismissing it at all. And despite the fact that many of our hedge fund guys were saying that this is a bubble, which it was. Several of these very highly regarded venture capital folks like Andreessen Horowitz or USV were considering this to be potentially as big as the Internet. So you need to take notice.”

    2022-06-13 · Capital Allocators · Marcos Veremis – Allocator's Perspective on Blockchain (EP.254, Crypto for Institutions 2, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “Were other people who were looking at the space and maybe had actually met a couple of the managers back then like Polychain and had spoken with clients about them, but there was no centralized effort at Cambridge. So what I tried to do is first of all gather all the information that was out there that we already had, gather it in a centralized way and figure out what we have, what we know, what we don't know. So that was the first step. And it was just me in the beginning. It was more like a project. From there, I started gathering all this information. We created an email list where many Cambridge consultants signed up for, and we exchanged ideas over there. So that was really helpful. We also read several media articles. We started reaching out to the managers back then that weren't that many trying to figure out what they're doing, how they're thinking, spoke with entrepreneurs.”

    2022-06-13 · Capital Allocators · Marcos Veremis – Allocator's Perspective on Blockchain (EP.254, Crypto for Institutions 2, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “Outside of traditional financial rails and without any intermediary. So immediately I was like, oh, wow, we should have had some Bitcoin next to our Greek government bonds. It would have helped a lot. So that's what kickstarted my interest. So it's deeply personal.”

    2022-06-13 · Capital Allocators · Marcos Veremis – Allocator's Perspective on Blockchain (EP.254, Crypto for Institutions 2, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “So I started seeing things that I could never have imagined. For example, you had government debt overnight being written down 75% or so. Just imagine if you woke up tomorrow on your treasuries, your safe assets were marked down by 75%. And then you had capital controls in 2017. I remember flying from London and giving my mom some extra cash because she couldn't get too much cash out of an ATM every week. You saw all these things and at the same time I bumped into Bitcoin. One of my Greek friends suggested I read a book called Mastering Bitcoin by Andreas Andonopoulos. And it was eye opening. I realized that there's a decentralized system of computers that's actually functioning, that transfers value on the internet outside of the internet.”

    2022-06-13 · Capital Allocators · Marcos Veremis – Allocator's Perspective on Blockchain (EP.254, Crypto for Institutions 2, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “You saw some managers having exposure to either blockchain companies or even Bitcoin on some occasions. So we also realized that we actually have exposure to these things. It's minimal at this point, but we actually have exposure. So when you have exposure and clients are asking what's going on, you better sit down and understand and have an opinion. I raised my hand at the time. The reason being that I had a very deep interest personally in the space. Where did that deep personal interest come from? Well, I am Greek, so I was born and raised in Greece. I think that gives you some context. There's what the major crisis in Greece that happened during the European debt crisis that started in 2012 or so until 2017. Although I wasn't in Greece, I was in the UK and the US. My family was there.”

    2022-06-13 · Capital Allocators · Marcos Veremis – Allocator's Perspective on Blockchain (EP.254, Crypto for Institutions 2, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “Marcos, great to see you. Great to see you, Ted. I thought it'd be interesting to talk about how you go from a traditional consulting role for many years into becoming the consultant crypto expert at Cambridge Associates. That's a long story, and it starts in early 2018. There were a couple of things happening while I was at Cambridge Associates then. Number one, clients had started noticing what's going on with Bitcoin and Ethereum and the price appreciation and so on. So they were asking questions about it. At that time, the questions were more theoretical. They weren't willing to act, but they were just curious to see what's going on. So we had to have an opinion. That's number one. Number two, in the 2016-17 traditional venture capital.”

    2022-06-13 · Capital Allocators · Marcos Veremis – Allocator's Perspective on Blockchain (EP.254, Crypto for Institutions 2, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “We kick off crypto for institutions too with Marcos Varenas. Marcos is a partner at Accolade Partners, a $4.4 billion venture fund of funds whose founder Joelle Caden appeared on the show earlier this year. Marcos manages $1 billion in blockchain fund to fund assets across liquid and venture strategies. He's one of the most well-regarded allocators in the space, having created and led the practice at Cambridge Associates before leaving to become a principal, first at Evanson Capital Management and then at Accolade. Our conversation covers Marcos' discovery of crypto while it Cambridge, building a formal research practice, and following institutional interest in the space. We then turn to his transition from consultant to the buy side of the buy side and his approach to manager selection, due diligence, portfolio construction, and oversight. We close with Marcos' perspective on”

    2022-06-13 · Capital Allocators · Marcos Veremis – Allocator's Perspective on Blockchain (EP.254, Crypto for Institutions 2, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source