Birch Hill raises $2.5 million pre-seed round led by ParaFi Capital and Castle Island Ventures for institutional onchain credit infrastructure

Birch Hill Holdings, an institutional onchain credit infrastructure company focused on lending and tokenized asset markets, has closed a $2.5 million pre-seed funding round co-led by ParaFi Capital and Castle Island Ventures.

The round was structured as a Simple Agreement for Future Equity (SAFE). It opened in late November and closed in early 2026, Birch Hill CEO Bhavin Vaid told The Block. Nascent, FalconX Ventures, JST Digital, and Flowdesk also participated in the round, alongside angel backers such as Bluerock founder and CEO Ramin Kamfar. The company did not disclose a post-money valuation.

The New York-based firm said it is building institutional lending strategies designed to prioritize capital preservation and structured risk controls, with its initial vaults launching on Morpho. Birch Hill has onboarded as an institutionally focused curator on the platform and plans to expand to additional protocols, such as Euler, Vaid said.

"Credit markets stand to benefit from the efficiencies of blockchain-based settlement, but institutional participation has been limited by the need for stronger risk oversight and operational clarity," Vaid said in a statement. "Our goal is to bring the discipline of traditional credit investing together with modern infrastructure in a way that meets institutional standards for governance, transparency, and risk management."

Birch Hill's founding team brings experience from both traditional finance and digital asset infrastructure. Vaid began his career in structured credit at Goldman Sachs and later invested in private equity at Cerberus Capital, before joining digital asset investment firm 10T Holdings in 2021. CTO Jack Forlines and COO Connor Flanagan previously worked on institutional risk systems within BlackRock's Aladdin platform before moving into digital asset data and infrastructure. Forlines and Flanagan later co-founded Unit Zero Labs, a research firm focused on onchain protocol analytics, now operating as Birch Hill Labs and underpinning the firm's vault design and quantitative risk framework.

Building institutional risk controls for onchain credit

Birch Hill's approach centers on its Collateral Risk Framework, which tracks collateral liquidity, oracle redundancy, and market-level metrics in real time. The firm said the system is structured to support transparent governance and documentation for regulatory and client reporting.

"Most onchain risk models focus on liquidation parameters and protocol-level safety," Vaid told The Block. "Our framework layers institutional-grade monitoring and real-time tracking of collateral quality, liquidity depth, and oracle integrity, paired with an auditable governance layer designed for regulatory and client reporting. It's built for allocators who need to explain their risk exposures to a board or compliance officer, not just avoid bad debt."

Vaid said Birch Hill is targeting traditional asset managers, credit-focused originators, registered investment advisers, family offices, and other funds with fiduciary obligations seeking compliant, auditable exposure to onchain credit, and is currently in active discussions with multiple parties.

Rather than aggregating yield from existing DeFi pools, the company said it aims to expand credit generation by bringing real-world assets and institutional borrowers onchain, a thesis it argues requires different infrastructure and risk controls.

As a curator, Birch Hill sets vault parameters, selects eligible collateral, establishes risk limits, and oversees ongoing monitoring. Its institutional focus translates into tighter collateral standards, more conservative loan-to-value ratios, and detailed exposure reporting, according to the team.

"For example, we may exclude collateral assets that other curators accept if the liquidity profile or oracle coverage doesn't meet our standards," Vaid said. "We also provide institutional clients with detailed reporting on vault exposures, collateral composition, and risk metrics — the same information they'd expect from a traditional credit manager. Every parameter change has a documented rationale. The goal is vaults that institutions can underwrite and explain to their stakeholders."

With the fresh capital in place, Birch Hill said it plans to expand its engineering and risk infrastructure teams and pursue regulatory authorizations, including potential registration as a registered investment adviser and evaluating broker-dealer registration in the United States.