Blockchain Capital flagship fund finishes 2019 up 12%

BCAP, the token representing Blockchain Capital's Liquid Venture Fund, closed 2019 up 12.3%, according to a client update reviewed by The Block. 

The fund, which was tokenized by Blockchain Capital in 2017, represents positions in major crypto companies like Kraken, Coinbase, and Ripple. Since inception, BCAP's net asset value has appreciated 238.2%.

In 2019, however, it failed to outperform major crypto assets like bitcoin, which appreciated more than 90% in 2019. BCAP is among the few successful and well-known security tokens. 

The fund's performance in Q4 weighed on its yearly performance, according to the client update. The net asset value of each BCAP token fell 5% from Q3 to 4, driven in part by "some mark-ups (Ripple) and mark-downs (Circle) in the equity positions." Circle, the Boston-based cryptocurrency firm, sold its once mighty cryptocurrency over-the-counter trading desk in 2019 and before that spun out Poloniex, the exchange it bought in 2018 for $400 million. 

Equity positions in companies make up approximately 70% of the portfolio, whereas token positions make up 10%. Network equity positions in the form of SAFTs make up another 7%. Bitcoin makes up a further 11.3% of the fund. The fund is worth $33 million. 

As of December 31 2019, the equity positions are as follows:

Here are the fund's token positions:

Spencer Bogart, Blockchain Capital's general partner, told The Block in an email that, looking ahead to the coming year, the firm is in the process of raising its Blockchain Capital Fund V with its first close coming in the next few months. 

He also touched on some of the factors the company is looking at in terms of the industry landscape, including the nature of firms that emerge to serve crypto users.

"I think we’ll see an expansion in profitable business models beyond simple onboarding (brokerage) – now that tens of millions of people own tens of billions of crypto, I think we’ll see more businesses offering users services that leverage the novel capabilities of programmable money," he said.

Bogart also reckoned that interest around the upcoming drop in the bitcoin block subsidy – from 12.5 BTC to 6.25 BTC – "will bring Bitcoin into the foreground and act as the spark for Bitcoin's next virtuous cycle."

"Rising price leads to more interest, more conviction in its future, more investment in supporting infrastructure, more hashpower contributing to network security, more onramps, greater liquidity, and better evidence of Bitcoin’s utility as a SoV. This cycle tends to feed itself until it overshoots, breaks, and resets," said Bogart.

Blockchain Capital was founded in 2013 by Bart Stephens, Bradford Stephens, and Brock Pierce. The firm has tried to scrub its ties with Pierce, who is known for his involvement in the EOS cryptocurrency and was previously the director of the now-defunct Bitcoin Foundation.