Hashdex, the Brazilian Crypto evangelist

May 12, 2021

Valor, as the leading Latam Venture firm in the Crypto space, has been investing in cryptoassets and companies for years, starting in 2015 when we were the first Latam fund to invest in Coinbase. We are proud to announce our Series A investment in Hashdex, the pioneer Brazilian Crypto Asset manager. Valor is leading the round and is joined by Softbank, Coinbase Ventures, and Igah. Other funds, such as Canary, Globo Ventures, Alexia, Fuse Capital and Endeavor Catalyst completed the round.

First some background. I first met Marcelo Sampaio and Bruno Caratori, Hashdex’s co-founders at the Brazil at Silicon Valley Conference in 2019, in which Valor was a sponsor. We kept in touch ever since. Venture Capital is a game of speed & trust and to develop a relationship with a founder years prior to an investment is the best way to start a good partnership.

Allow me to elaborate on our investment thesis:

The secular tailwind for Cryptoassets

Similar to the mainframes in the 60s, PCs in the 70s, the internet in the 90s and smartphones in the 200s, we believe during the 2020s blockchain is the new computing platform that will enable the creation of new, innovative and large companies and projects. Due to the de-centralized nature of blockchain, value will accrue to participants in the ecosystem and cryptoasset holders. We are still in the early days of this new computing revolution. In the short term, cryptoassets are also benefiting from the current macro environment of with low interest rates and money printing.

Hashdex is solving a difficult problem

It’s hard for Brazilian investors to access sophisticated investment products. The challenge for crypto is even greater. Hashdex had to overcome multiple barriers, such as low-awareness of the asset class, absence of a regulatory framework, no local crypto service providers, no distribution channels and scale.

Hashdex solved each of these problems and is leading the movement to popularize crypto for Brazilian investors, creating products which make it easier for any investor to gain exposure to the asset class.

To give one example, Hashdex developed an index approach to crypto, taking away the complexity an investor would have to pick the “right” cryptoasset. Their index was so well received that Nasdaq is using their methodology for the Nasdaq Crypto Index. By using strict eligibility criteria such as market capitalization, institutional exchange and custody availability, liquidity and minimum market representation, the NCI captures the bulk of the crypto asset market and rebalances quarterly.

Hashdex is growing impressively and is a pioneer in the global crypto market

By operating in challenging local environment, Hashdex has become a pioneer in the crypto industry on a global basis. In February, Hashdex launched the world’s first crypto exchange-traded fund (ETF), the Hashdex NASDAQ Crypto Index ETF. The fund, which is available for trading on the Bermuda Stock Exchange (BSX) for accredited non-U.S. investors, offers a simple solution for institutional investors to gain exposure to the cryptoasset market.

The company also launched an ETF which began trading on the Sao Paulo-based stock exchange B3 in late April, and has doubled in size within its first week of trading.

Performance numbers have followed. Hashdex grew assets under management >20x in the last 12 months and the company is aggressively adding new investors on a daily basis.

TTM: Team, TAM, Moat

Team: Hashdex has one of the best crypto teams we have seen, combining experience in entrepreneurship, investing, technology, regulation and blockchain.

TAM: Brazil has the largest asset management industry in LatAm with total investment assets reaching $1.4 trillion in 2019, growing at a solid 14% CAGR over the last five years. In addition, we believe Hashdex’s ETFs could be expanded to different markets, in particular the US, in which the company already has a partnership with Nasdaq.

Moat: the asset management industry has low barriers of entry, however an established firm has strong moats. In the case of Hashdex, we believe they will benefit from (i) Scale, as the largest Latam crypto asset manager and ETF manager; (ii) Brand, considering the still newness of crypto, investors will converge to players they already know; (iii) Distribution Agreements with all major retail and private banking platforms.

Our macro crypto thesis can be summarized as “Crossing the Chasm”, an homage to Geoffrey Moore’s book. The greatest opportunities in crypto and blockchain lie in endeavors which are helping the technology go mainstream. Hashdex fits perfectly in this thesis.

We are proud to partner with Hashdex not only for what the company has accomplished, but also for what the future holds. We believe Hashdex’s opportunity is global and that the company could become a large player in international markets, starting with the US.

As the company motto “In vol we trust”, we can say proudly, “In Hashdex we trust…and invest