Disrupting Wall Street with a Rolling Fund: An Interview with Alexander Pack

A few years ago, Alexander Pack kickstarted Bain Capital’s foray into crypto investments. Now he’s launching his own crypto-focused Rolling Fund and doubling down on what he sees as civilization-changing technology.

Pack has worked as an investor since 2014, first for a Hong Kong-based fintech VC, then as an analyst at AngelList before joining Bain Capital Ventures. In 2018, he co-founded a crypto-focused venture fund with a VC based in China. Now, he’s striking out on his own.

AngelList’s Seif Salama sat down with Pack to discuss:

• The outlook for crypto (and why he’s so bullish on it),
• His fund strategy and how he differentiates; and
• Why he chose Rolling Funds,
  

‍Seif: How did you get into investing in general, and what drew you to crypto?
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Alexander: I always loved technology and the startup industry. I always wanted to live in Silicon Valley. My story is a bit unique in that my career started with VC. I was a college professor in Hong Kong for a short while out of college, but other than that, I’ve been investing in startups with an increasing focus on crypto.

‍Seif: Why do you focus on crypto investments?
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Alexander: Crypto, in particular, was always exciting to me because it's like civilization-level disruption; it's huge. It's transforming the way the whole capitalist system works. I love being part of that and backing teams that are at the center of this disruption.

There are many significant areas you can invest in — healthcare, AI, marketplaces — that’ll produce amazing companies. But they're all incremental disruptions relative to crypto. I view crypto as the second stage of the internet. The first stage was bringing information and all these industries online. The second stage is bringing value online — e.g., scarce information — and that is a massive opportunity, as big as the $25T+ financial system itself.

Today, crypto is hitting an inflection point. There’s exponential growth across so many use cases and metrics: user numbers, assets held in decentralized finance protocols, value transacted on-chain. And it’s all accelerating in the past year. That’s why I'm doubling down on my own to do this. ‍

Seif: What do you look for in an investment?
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Alexander: I bring a venture mindset to every deal I do, employing a process that I’ve honed over the years working with leading VCs. The first step is to spot trends early. I do a lot of primary research, focusing on technology and what drivers will lead to a category disruption. Then I go out and meet every team in a category and identify the future leaders. I focus on the markets that I think will be massive and will generate unicorn or deca-corn level companies.

Then, I invest with conviction. I like to invest at the very beginning, often as the first check or even as a “founding investor,” and I double down to preempt rounds and build ownership in my winners. One unique thing about me is that I’ve invested across stages, and at this point, have backed winners and supported my portfolio from first-check through to being a category-leading unicorn, so I’m comfortable investing and supporting founders across stages in their journey.

Seif: What differentiates your fund?
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Alexander: I’m at the center of a Venn diagram in two important areas. One, I'm one of the few investors with a proven track record in crypto: I’ve invested in dozens of crypto companies over the years, including as first institutional check into three unicorns, founded a category-leading crypto company, and advise some of the largest crypto companies globally. Two, I have institutional investment experience: I’ve generated $200M+ in markup gains, top-decile returns, and I have been fortunate to learn the art of venture investing from legendary investors.

A handful of people in crypto might have one or the other; very few have both. My experience of working with the leaders in this space for years - as an early investor, advisor, and builder - has given me deep connectivity, as well as unique information and deal flow advantage. I think that brings a level of de-risking, both for my investments (that I can add value to them as I have done with prior startups before them) and my investors.

Seif: What did you like about Rolling Funds?
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Alexander: I love the flexibility and support I get. With Rolling Funds, I don’t spend time thinking about all the parts of running a fund that would distract me from being a good investor. AngelList does that all for me — from fundraising to fund administration, taxes, the works. I’ve started a $100M fund from scratch before and can tell you that these things add up to be an unbelievable time sink and distraction.

Also, I have the ability to scale the Rolling Fund up and down quickly. There are lots of investors out there who don’t want to make a 10-20 year commitment to managing a fund. Rolling Funds offers that flexibility. It’s truly a disruptive innovation in the venture capital and fundraising industry.

That flexibility extends to my LPs, too. I set a high minimum for joining the fund — because it’s fairly large right now, and I don’t want to run out of investor slots — but I don’t require my investors to subscribe upfront for multiple quarters in a row. So if you join me for a quarter or two and you see all the deals I'm doing and don’t like what you see, then I’m happy for you to drop out of the fund. That's part of the matching process.

Seif: What’s the downside you see to the traditional path?
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Alexander: Fundraising is an enormous headache for VCs. Some fundraising is good because it helps you keep in sync with your investors, who are your customers. But a lot of fundraising — especially the kind of fundraising you have to do as a first-time GP on a small fund — is just a big chunk of wasted time. It’s very distracting, and it reduces your ability to invest and stay in the market aggressively.

I have lots of friends who also started traditional funds. They go out to raise a fund for a year or two, and it’s like they fell off the face of the earth. They don’t make any investments for the entire fundraising period. They miss the latest trends, they lose track of what's happening in the market, and the market forgets who they are. That's a kiss of death for an investor. Being a good investor is all about being in the flow.

Seif: What advice do you have for investors starting out?
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Alexander: With investing, the best way to learn is by doing. Try to get some money to invest, or try to simulate it as much as possible. One way to simulate it is by investing your time — go work for companies that you would want to invest in. Consult or advise companies, even informally. Spend time with friends who you think are really talented and could start great companies and help them in some way. Once you’ve proved to the market that you have a decent eye for talent and can be a value-add to founders, that’s half the battle. Maybe you could run a Syndicate on AngelList or raise a Rolling Fund once you’ve built some track record.