How a $115M Crypto Fund With Big Ambitions Plans to Invest In Latin America

• Hyla Fund Management is launching a new $30 million fund focused on the Latin American crypto sector.
• The "funds of funds" specializes in giving investors access to other hedge funds.
• The Latin American crypto market is still very small, Hyla CEO Paola Origel told CoinDesk, but it’s filled with opportunity.

There’s a big business opportunity for crypto funds focused on Latin America.

That’s according to Paola Origel, the CEO and co-founder of Hyla Fund Management — a firm that invests in other hedge funds on behalf of its clients — with $115 million assets under management.

“Many big funds like Sequoia and a16z have been trying to capture that market, but it's very fractionalized and challenging to break in because of the difference in culture,” Origel told CoinDesk in an interview. “You really need boots on the ground, people who understand the market and communicate opportunities to founders.”

“In Latin America, and specifically in Mexico, there are very few venture capital funds," she continued. "They’re almost non-existent … I scouted the entire region for the best managers with the most impressive track record to put together this fund.” She eventually picked three, all based in Mexico City.

Originally from Mexico herself, Origel has 17 years of experience in the financial sector and was recently included in the top 50 women leaders in investment management by Women We Admire — a membership-only organization for professional women.

The crypto ecosystem in Latin America in 2024 presents similar opportunities — and challenges — as the crypto industry did on a global scale in 2017. “Back in the day, there were no service providers or vendors that understood blockchain or crypto at all,” said Origel. "I believe we were the first institutional fund to open a bank account with Wells Fargo, because they didn't understand what it was.”

One of the biggest roadblocks in converting Latin American investors to concept of crypto, is education about the sector. Cryptocurrencies, which don't have a physical existence like gold or cash, can be a difficult concept for investors to grasp. “Latin American investors are still very traditional,” she added. “They tell me they only invest in things that they can stand on, or things they can touch. We’re trying to change that mentality… we need to prove to them that these technologies actually work.”

The Goldman Sachs of Crypto

A crypto fund of funds acts like a bridge between traditional investors and the crypto ecosystem, Origel said. The crypto space is new and rapidly evolving, and some investors simply don’t have the time, resources or specialized knowledge to dive into the industry and figure out which crypto hedge funds they want exposure to. That’s where Hyla steps in.

“The value of a fund of funds is access,” Origel said. “We’re jurisdiction agnostic, so we know most of the fund managers around the world, and each manager has their own strategy. For example, some funds are fully dedicated to the development of layer 2s on Bitcoin.”

Not only is Hyla is in regular contact with fund managers, but the firm also has lines of communication with all the founders that these funds have invested in — which gives Hyla a unique perspective on the crypto ecosystem as a whole, and makes it easy to help the right people meet.

“It’s not a new concept. Funds of funds have been tried and tested in traditional finance for many years,” Origel added. “But in crypto, that approach holds even more value because of how fragmented and complex the space can be.”

Down the line, the ambition is for Hyla to become the "Goldman Sachs for digital assets," according to Origel. The firm currently offers a variety of strategies, including its liquid venture fund and its bitcoin BTC$94,379.42 and ether ETH$1,810.08 market-neutral yield strategies. And the Latin America fund, slated to launch in January 2025, will add $30 million moreto Hyla’s assets under management.

Investing in Latin America

So why Latin America?

According to Origel, crypto can have a transformative impact on the region's economies and help them rise up “to the next level, to stop being frontier markets.”

She sees Remittances as one of the obvious areas of growth, since most Latin Americans must contend with exorbitant fees and difficult banking sectors when they try to send funds internationally — like from the U.S. to Honduras, for example. Mobile companies also have plenty of room to improve their products, Origel said, for peer-to-peer transactions, especially since a large percentage of the region’s population is still unbanked.

The global shift in supply chains is presenting further opportunities for Latin America, she said, as is the rise in entrepreneurial talent in countries like Brazil, Colombia, and Argentina, and the fact that venture capital investment in the region remains “disproportionately low.”

At the same time, Origel says that it’s still very early days, and that has an impact on investment decisions. “The market is still so small that you can’t be very picky,” she said. “You can’t say ‘Oh, we're only going to focus on infrastructure,’ because there’s not enough deal flow for that. You need to be open to any sector.”

And not all Latin American countries have the same profile, obviously.

Origel singled out Brazil for its technological development in the crypto sphere, as well as Mexico because of her experience in that country’s markets. Argentina and El Salvador are also on her radar. In the end, though, the jurisdiction doesn’t matter as much as the quality of a project and the caliber of a team.

“We want to find the next unicorns that will have not only a regional impact, but a global one,” Origel said.