LSE-listed fintech fund Augmentum launches DeFi investment strategy

Augmentum Fintech, a £193m London-based investment fund listed on the London Stock Exchange, will begin investing in decentralized finance (DeFi) protocols through a new partnership.

The company has allocated an undisclosed sum of money to ParaFi Capital, the San Francisco-based investment firm that specializes in blockchain and DeFi.

Tim Levene, chief executive of Augmentum, told The Block the figure is in the “low single-digit millions”, but added that the fund has the flexibility to expand that position over time if ParaFi delivers.

“We’ve allocated some money to them to deploy and then over time our expectation is that there will be co-invest opportunities through that fund,” he added.

Augmentum’s portfolio already features a wide variety of fintech disruptors, from identification verification firm OnFido, to digital banks Tide, Monese and Zopa, the last of which was also the world’s first-ever peer-to-peer lender. ParaFi, meanwhile, has backed in a number of well-known DeFi protocols, including Uniswap, MakerDAO and Compound.

In a blog post announcing the partnership on January 8, Augmentum said the two firms would co-invest in DeFi development teams in Europe and the United States “prior to public launch”.

“ParaFi will invest at the pre-seed stage, before public tokens are launched… We think that there’s massive opportunity if you can get in at that stage,” said Ellen Logan, investment associate at Augmentum.

Augmentum ordinarily invests directly in startups, rather than allocating funds to other investment vehicles – which, of course, engenders additional fees – but Levene said DeFi is “a special case in that it’s an emerging sector that requires a huge depth of understanding”.  

“As Europe starts to look at this space, it’s clear that in what I would call traditional venture this would be an area that is quite unusual at the moment,” he told The Block. 

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