Haruko’s origins lie in the crypto trading and investment business that Malik and his colleagues used to spend their time running. In the absence of an off-the-shelf technology solution for businesses engaged in such activities, Malik and his team built their own. And when hedge fund clients started asking them if they could license the platform for their own activities, they began to realise they had something of real potential value on their hands.
By the first quarter of 2021, the team had already signed up a handful of clients for the platform, without Haruko even having launched formally in its own right. “That’s when we realised there was an opportunity to grow and scale the business,” Malik explains. Haruko was quickly incorporated and the business started to look for investment. Three of the first four venture capital firms approached offered to lead their funding round.
Fast forward a year and the $10m finance raise that Haruko has just announced comes in part from one of those four firms – White Star Capital. Haruko was also introduced to Portage Ventures, the venture capital arm of Canadian asset manager Sagard, which has joined White Star in the round.
The stiff competition for a piece of the funding action reflects the realities of the crypto market today, Malik believes. While institutional investors such as hedge funds and assets managers – and even banks – are anxious to raise their exposure to a broad range of crypto assets, the technology platforms to help them do it are in their infancy. Integrated solutions are more or less non-existent.
“The lack of reliable technology rails is deterring institutional investors that want to get into this space,” Malik warns. “Our goal is to help them achieve their goal of allocating their capital to crypto.”
Effectively, Haruko is an investment platform offering portfolio management services such as a single portfolio view, reconciliations, valuations and reporting. It gives institutional investors with crypto investments a quick and easy way to see where they stand at any given moment – and to manage risk more effectively. The aim is for clients to be able to use the product to capture a granular set of risk metrics and get real-time pricing and analytics in a way that integrates with their existing systems and technologies.
Importantly, Haruko covers both centralised (CeFi) finance crypto assets – those traded through a central exchange – and decentralised finance (DeFi), where no such middleman exists. “There are others in the market who have launched tools for one or other of those platforms, but we think ours are better – and no-one is offering botch CeFi and DeFi functionality on one platform,” Malik argues. “That’s very much our unique selling point; we know where all the pain points are on both.”
For now at least, Haruko isn’t offering execution services, but the platform expects to add these over time, along with any other tools needed for institutional investors to trade and manage in the crypto marketplace. “It is all about finding ways to enable them to better manage their crypto portfolios,” Malik adds.
Stephanie Choo, a partner at Portage Ventures, which is taking the lead in the Haruko fundraising, is certainly excited. “Many current solutions require a level of trust that institutions can’t afford to give,” she says.
“We believe Haruko has successfully combined financial and technology expertise to engineer institutional-grade services that put crypto trading on par with other asset classes. We conducted extensive research for a portfolio management system alongside several crypto-hedge funds and found Haruko to be the best product for CeFi and DeFi valuations in one fully integrated platform.”
Customers are also coming on board at a rate of knots, not least thanks to the introductions that Haruko’s investors are in a position to make. Malik is hopeful of 10-fold growth by the end of the year, with a software-as-a-service model that gives the business a reliable stream of revenues.