Cloudwall Capital raises $6.3m to build crypto risk insights tool

Digital asset risk management start-up, Cloudwall Capital, has raised $6.3m in seed funding led by LocalGlobe and Illuminate Financial, to build a risk management platform for institutional investors called Serenity.

The company says its product will bridge the gap between traditional finance and decentralised finance, so institutional investors can invest with confidence.

Cloudwall Capital claims that recent crypto market volatility has underscored the need for such a product, particularly as crypto engagement among institutional investors continues to rise.

The startup says that a product that can stress test and model portfolio outcomes in the digital asset space does not exist for institutional investors, presenting a barrier to entry for some.

“Digital assets underwent explosive growth between 2020 and 2021, with almost five years of growth taking place overnight,” said Kyle Downey, co-founder and CEO at Cloudwall Capital. “Recent market gyrations have only increased the case for a digital asset platform to manage risk so that institutional investors have the tools and platforms to help manage their portfolios and risks.”

A study by Fidelity Digital Assets last year found that seven out of 10 institutional investors expect to invest or buy digital assets in the future.

Cloudwall Capital says it is keen to position itself as a “critical arbiter of risk and insight” to serve this growing category of digital asset hedge funds, family offices and asset managers looking to enter the space.   

“In the course of our market research, we identified the lack of institutional-grade risk and analytics products for investors in cryptocurrencies as a serious issue – with traditional finance models insufficient at best, and misleading most of the time for this growing market,” said Ilya Kulyatin, co-founder and head of research at Cloudwall Capital.

“There is a need for a new risk modelling and valuation paradigm. The platform we are building, Serenity, will be the first and most advanced solution for this new world of digital assets.”

The cloud-based platform will combine risk management with research to allow investors to pull in their portfolios and access historical data from a range of sources. The platform’s statistical and machine learning algorithms will also enable investors to run simulations and stress tests on their portfolios to see how they will behave.

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