Lennertz Family Office Aims to Raise $165 Million for Blockchain-Focused Fund of Funds

The German investment firm Lennertz & Co. is on track to raise $165 million for its third fund of funds, focusing on the blockchain sector. This initiative positions Lennertz as a significant player in the crypto investment landscape, especially following the recent volatility in the market.

Key Takeaways

• Fund Size: Lennertz is raising $165 million for its third blockchain-focused fund of funds.

• Investment Strategy: The firm invests in other venture capital funds rather than directly in companies or tokens.

• Performance: Previous funds have shown strong returns, with an internal rate of return exceeding 35% per year.

• Market Context: The crypto market has seen fluctuations, but blockchain investments are performing relatively well.

Background of Lennertz & Co.

Established in 2015, Lennertz & Co. is a multi-family office that diversifies its investments across various asset classes, including private equity and traditional venture capital. The firm ventured into the blockchain space around 2016, initially making private investments before launching its first fund of funds in 2020, followed by a second fund in 2022.

Investment Focus and Strategy

As a fund of funds, Lennertz does not invest directly in portfolio companies or token deals. Instead, it allocates capital to established venture capital firms specializing in crypto, such as Multicoin, Polychain, and Hack VC. The second fund focused on generalist funds with crypto strategies, including notable names like Bain Capital and Andreessen Horowitz.

Oksana Tiedt, head of fund investments at Lennertz, highlighted that the decision to raise a new fund was influenced by the performance of its crypto holdings compared to other investments. She noted, "We’re seeing real distributions from these funds, whereby when you have a tight market like now, everybody from private equity to venture is just struggling with lack of distributions. Blockchain is actually sitting quite comfortably."

Market Conditions and Future Outlook

The past few years have been tumultuous for the crypto industry, with the bull market of 2021 giving way to the collapse of FTX in late 2022. However, a modest recovery has been observed, particularly with the approval of Bitcoin ETFs in early 2024. Currently, major asset prices remain stagnant, and there is a low appetite for new token launches.

Tiedt expressed optimism about the evolving landscape, stating that funds are beginning to explore opportunities beyond infrastructure and middleware projects. She emphasized the growing interest in decentralized finance (DeFi) and the intersection of blockchain and artificial intelligence (AI).

Fund Allocation and Investor Base

In its third fund of funds, Lennertz plans to invest in eight to ten blockchain-focused venture capital funds, primarily in the U.S. but also in Europe. Tiedt mentioned that the firm has already raised enough capital to invest in two funds, including Polychain and Bain Capital’s crypto fund.

Despite the challenges faced by the crypto sector, Lennertz's base of around 40 families, primarily entrepreneurs, supports its investment strategy. The firm has successfully logged an internal rate of return over 35% per year for its initial two funds, indicating strong performance in a volatile market.

Conclusion

While the crypto sector may not have reached its peak from 2021, there is a growing accumulation of capital on the sidelines, signaling renewed interest in blockchain investments. As Lennertz & Co. moves forward with its ambitious fundraising efforts, it aims to solidify its position as a leading player in the blockchain investment arena.

Sources

• Exclusive: Family office Lennertz raising $165 million for blockchain-focused fund of funds | Fortune Crypto, Fortune.