Chapel Hill investor Morgan Creek Capital is pushing ahead with its third venture capital fund – while at the same time funneling more cash into some of its longtime portfolio firms.
In an interview, CEO Mark Yusko said the company has closed on about $80 million of its $400 million third fund. And co-investments are a part of its model.
“We invest out of our funds in opportunities,” he said. “We co-invest alongside our managers in deals and, in certain cases where the deal is extra attractive, we’ll raise a special purpose vehicle for that deal.”
Such is the case with BlockFi, a part of Morgan Creek’s portfolio for four years. Yusko said Morgan Creek was an early investor in the company back in its first venture capital round, and that deal afforded it pro rata rights – meaning that it has the opportunity to keep investing in subsequent rounds to maintain its 10 percent stake.
And that’s exactly what Morgan Creek did in the vehicle described in securities filings as Morgan Creek Private Opportunities, LLC Series K – BlockFi, a $5.9 million vehicle that closed Aug. 6.
BlockFi, a fintech that’s similar to a bank, but for digital assets, is just one of Morgan Creek’s interests.
Morgan Creek has also been playing in the SPAC space, both through a hedge fund and an exchange-traded fund (ETF).
It’s been a challenging playing field, Yusko said. While its SPAC-targeted hedge fund is “doing fantastically,” at 30 percent since its launch last year, its ETF “has been a little rockier.” The ETF focuses on post-merger combined entities – “and unfortunately, the post-merger combined entities have really struggled since February.”
But Yusko said he’s not worried.
“Investing in growth, it’s really hard to value the future because it’s unknown,” he said.
Yusko said he’s bullish about the economy – even as the resurgence of Covid-19 causes renewed uncertainty.
“This economic reaction tends to be more muted,” he said. He sees some volatility – but said his overall outlook is getting better, as signs point to improvements in the supply chain.
Yusko's firm isn't the only one raising money.
SEC filings show several investors upping the stakes in recent months.Durham's Idea Fund Partners, for example, inked three closes this week, raising $302,500, $367,500 and $262,500 through IDEA Co-Investment Fund I LP. Managing partner Lister Delgado said they were earmarked for portfolio companies.
NQ PE Orange Co-Invest LP, a vehicle out of Raleigh-based NovaQuest, posted a filing for a fund that had yet to raise capital. Real estate investor Oakwood Lending closed on a $375,000 debt round.
And that's all just in August.
