Founder of a billion-dollar investment firm says: Stop investing in the crypto industry, but will prioritize follow-on investment in FTX equity
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Founder of a billion-dollar investment firm says: Stop investing in the crypto industry, but will prioritize follow-on investment in FTX equity
Orlando Bravo, co-founder of private equity firm Thoma Bravo, believes the crypto industry has low ethical standards and will pause investments, but if he were to invest, he would continue funding FTX, stating: "FTX will be a big winner!"
Navigating Web3 tides with focused insightsThe UK's Financial Times reported that Orlando Bravo, co-founder of the private equity firm Thoma Bravo, believes the crypto industry lacks strong ethical standards and that his firm has paused investments in the sector. However, if he were to invest, he would reinvest in FTX, stating: "FTX will be a big winner!"
Orlando Bravo is the co-founder of Thoma Bravo, a billion-dollar private equity fund, and also a supporter of Bitcoin. In a recent interview with the Financial Times, Orlando Bravo stated that certain parts of the crypto industry fall short of the ethical standards seen in private equity, and his firm has currently suspended investments in the crypto space.
Thoma Bravo currently holds stakes in five crypto companies. Aside from investing approximately $150 million in FTX last year, these include Anchorage Digital, FalconX, Figment, and TRM Labs.
Although Orlando Bravo is satisfied with his firm’s current investments, he acknowledges that the ethical standards within the crypto industry need improvement.
"(Investing in crypto) has given me deeper insight into the world. I believe certain business practices in the crypto industry do not meet the ethical standards of the private equity industry when dealing with investors, users, and communities. That’s somewhat disappointing."
Other than FTX, not considering investment in other crypto firms for now
Orlando Bravo has long been a supporter of Bitcoin, frequently expressing public support and viewing cryptocurrencies as a potential "ultimate store of value." However, he has also criticized the lack of transparency in the crypto market, though he believes the industry is still young and that ethical issues will resolve over time.
While not specifying exactly what ethical shortcomings exist in the crypto industry, the Financial Times cited examples such as the collapse of TerraUSD and the bankruptcy of lending platform Celsius. These cases demonstrate that the crypto industry's regulations around capital adequacy, solvency, and liquidity are far less robust than those in traditional finance—shortcomings that clearly harm investors and users during periods of low liquidity.
When asked whether he would make further investments in crypto companies at present, Orlando Bravo vaguely indicated he is in no rush:
"We've done many, many successful deals. If some of our deals haven't yet succeeded, we won't rush into doing anything else. We're happy with our current investments and want to see these companies grow so we can do more (i.e., invest more)."
However, he said that if FTX raises another round of funding, he would definitely consider increasing his stake in the company. He believes FTX will be a "big winner" in the crypto industry and described SBF as one of the best entrepreneurs he has ever met.
In a recent interview, SBF revealed that FTX still holds $1 billion in cash, thanks to strong liquidity management, relatively low personnel and administrative costs, and the fact that FTX did not over-expand or over-lend during the bull market.
Additionally, SBF noted that FTX's revenue this year could reach $1 billion.
Orlando Bravo does not believe private equity is a pyramid scheme
Earlier this week, Mikkel Svenstrup, chief investment officer of Denmark's largest pension fund ATP, suggested that the current operating model of private equity funds resembles a pyramid scheme. This is because ATP-invested private equity funds have sold more than 80% of their portfolios to other private equity firms—a practice of selling among peers or "hand-to-hand" transfers—which he views as unhealthy.
Of course, Mikkel Svenstrup isn't claiming private equity funds are pyramid schemes today; he's simply concerned that this business model could eventually become high-cost, low-return, and potentially stop growing altogether.
In response, Orlando Bravo disagrees, noting that Thoma Bravo has also sold many of its portfolio companies to other private equity firms—and so far, their performance remains strong.
"Other private equity firms may see a future that we don’t. These opportunities might be ones we haven’t recognized in the past five years. They buy these portfolios from us because it benefits them."
He argues that this operational model is no different from public markets—where profitable assets attract buyers—and yet no one calls public markets pyramid schemes.
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