Crypto risk management startup Cloudwall Capital raises $6.3M

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Cloudwall Capital, a new digital asset risk management startup, has raised $6.3 million in seed funding led by LocalGlobe and Illuminate Financial to help it build the tool to connect the world of finance traditional to digital assets and decentralized finance.

They were joined by a syndicate of investors including IA Capital Partners, Eberg Capital and NEMO Ventures, as well as angel investors founding and operating decentralized and traditional finance.

Founded in 2021, Cloudwall Capital is developing a new product, Serenity, which will provide institutional investors with risk management insights to effectively build portfolios and manage the risks inherent in digital assets so they can invest with confidence. As recent volatility in the digital asset market has shown, there is a clear need for a platform that can help investors assess risk and correlation more accurately, make better investment decisions. investment and to demonstrate to their investors that they have batteries to facilitate their work.

Despite the volatility and collapse of stablecoins such as UST, institutional engagement with crypto continues to grow significantly. Many traditional asset managers are now launching new specialized crypto funds and investing in platforms and assets. New tokens are continually being created and new investment mechanisms such as derivatives, staking, and liquidity pools add both opportunities and risks that are complex to understand and quantify. As blockchain technology further encroaches on our economy, including the tokenization of more traditional assets, Cloudwall Capital may become the critical arbiter of risk and insight for institutional investors.

Understanding risk in the new world of digital assets

For traditional finance, understanding risk is essential, with different platforms and services such as Moody’s Analytics and Aladdin by BlackRock designed to serve investors around the world. These platforms help asset managers run stress tests and models to determine the impact on their portfolios. However, there is currently no similar service for investors in the digital asset space – an issue that has become increasingly pressing given that it is far more volatile than traditional markets. It is also not easy to quantify the risks associated with digital assets, as there are few assessment measures available.

Cloudwall Capital is building Serenity, its digital asset portfolio management platform, to solve these challenges. The cloud-based platform combines risk management with research to give investors insight into their assets and potential. It allows investors to mine their portfolios and access historical data from a range of sources, including centralized exchanges and blockchain data to analyze and demystify the digital asset market, including the ability to break down the entire market. The platform’s proprietary statistical and machine learning algorithms will also allow investors to run simulations and stress tests on their portfolios to see how they will perform. Serenity does not advise managers on what to do. Instead, it provides customers with the data and insights needed to understand the context of what’s happening and the likely outcomes to make better decisions.

Cloudwall can achieve this thanks to the strength of the founding team, which combines more than 50 years of experience in different areas of financial services. CEO Kyle Downey was Managing Director and Global Head of Automated Risk Trading and Quantitative Investment Strategies at Morgan Stanley. COO Jia Yng Wee spent more than 20 years in global markets and private banking at Morgan Stanley, DB, Coutts and Nomura, spanning senior operations and corporate management positions, while head of research Ilya Kulyatin is a former fintech founder and has over a decade of experience. quantitative research experience in hedge funds, asset management and market making. The founders inherently understand quantitative asset management, combined with a passion and belief in digital assets and a drive to build a powerful platform for investors to meet their investment and risk goals.

Fueling the Blockchain Economy

Although much of the current interest in this space revolves around NFTs or cryptocurrencies, in the future it could all be tokenized in what Cloudwall calls the Blockchain economy. This will include everything from stocks and bonds to real estate, art, vintage cars, intellectual property rights, commodities, accounts receivable and more.

Institutional investors need tools to access this new economy so they can invest with confidence – a survey last year found seven out of 10 institutional investors plan to invest in or buy digital assets in the future. Serenity is aimed at this growing category of digital asset hedge funds, family offices and asset managers looking to enter this space.

Cloudwall will use its seed funding to grow its team to 15 people by the end of the year and further develop the platform with the goal of launching an early access program this summer.

Kyle Downey, co-founder and CEO of Cloudwall Capital, said, “Digital assets have seen explosive growth between 2020 and 2021, with nearly five years of overnight growth. Recent market fluctuations have only increased the case for a digital asset platform to manage risk so that institutional investors have the tools and platforms to help them manage their portfolios and their risks. We are building Serenity to do just that and are excited about the potential of this platform to empower more people to invest in digital assets and unlock trillions of dollars in blockchain assets.

Jia Yng Wee, co-founder and COO of Cloudwall Capital, said, “It’s becoming increasingly clear to institutional investors that they should be investing in digital assets if they aren’t already, but they don’t. lack the tools to help them embrace this new market. in a way they are used to. We are building Serenity to provide this solution and support the careful growth of this industry. It’s incredibly rewarding to work on the convergence of traditional finance with digital assets and there’s so much potential for us to make an impact.

Ilya Kulyatin, Co-Founder and Head of Research at Cloudwall Capital, said, “During our market research, we identified the lack of institutional-grade risk and analysis products for crypto investors. currencies as a serious problem – with traditional funding models. insufficient at best and misleading most of the time for this growing market. A new paradigm for modeling and risk assessment is needed. The platform we are building, Serenity, will be the first and most advanced solution for this new world of digital assets. »

Julian Rowe, General Partner at LocalGlobe, said, “Digital assets require a different understanding of risk and correlation to traditional finance. Institutional investors, from crypto funds to traditional asset managers, are keen to invest in digital assets and decentralized finance as they capture a growing share of our economy. Unfortunately, few have access to the institutional-grade models and tools at their disposal to understand risk, volatility, and opportunity. Cloudwall Capital is building this layer of information and I look forward to working with Kyle, Jia Yng, Ilya and the Cloudwall team as they rise to this challenge and launch Serenity later this year.

Alexander Ross, General Partner at Illuminate Financial, said: “During 2021, a large number of TradFi institutions, some of which are LPs in our funds, began investing in crypto assets. As a result, we are seeing significant demand for an institutional-grade risk management solution. Recent market conditions are further exacerbating the need for risk management solutions and we strongly believe that Kyle, Ilya and Jia are the ideal team to build this.

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