Tim Levene, CEO of Augmentum Fintech investment company, believes cryptocurrencies have reached "a point of no return”.
The CEO and investment manager of the £147m investment company said when studying the impact of the pandemic, he has been considering which parts of the financial technology industry have seen the most substantial change.
"Crypto and digital assets are areas where we have taken a much closer look and we have taken some exposure there," he said.
Levene is not looking to purchase cryptocurrencies themselves but rather the digital infrastructure behind it.
"There is going to be a continued institutionalisation of this sector," he highlighted.
The company is looking to buy the pick and shovel companies behind the offering of cryptocurrencies such as compliance, data analytics and platforms.
One example of a company Augmentum has added to its portfolio is Tesseract, a digital asset lending platform.
Levene generally looks to hold a company for five to seven years and is looking for investments that have a proven concept, are generating revenue, but where the "journey to exit is ultimately taking time".
The current portfolio comprises 22 companies, which are at a range of different maturities.
For instance, the largest holding is interactive investor, which makes up 16.9% of the portfolio. Levene said this is an "established company," which has "talked openly about aspirations of IPO in the not too distant future".
On the flipside of the coin, he also holds 8.1% of the portfolio in Farewill, which the CEO said is a "real emerging fintech brand".
When asked why focus on the fintech companies, Levene, who was one of the founding employees of Betfair, said the size of the opportunity within financial services is "arguably the biggest" but the "penetration of fintech disruptors is still very early".
He believes the market is currently 10% disrupted so "has a long way to go".
The trust launched in March 2018 and is trading at a 12.7% premium. It has had strong performance, returning 41.3% in one year, compared to the Technology & Media Association of Investment Companies (AIC) sector. However, in three years, it has significantly underperformed the sector returning 44.5% compared to 83.1%, according to AIC data.