Arthur Hayes & Adam Schlegel on Maelstrom Private Equity Fund

Maelstrom, Arthur Hayes' family investment office, is launching a new crypto private equity fund aiming to raise at least $250 million to acquire profitable, scaled crypto infrastructure companies, providing an exit for founders and a more structured investment product for institutional LPs.

• Maelstrom's private equity fund targets profitable crypto infrastructure companies, bridging the gap between innovative crypto projects and institutional capital.

• The fund offers a structured, cash-based exit for founders and a professional investment vehicle for LPs seeking scaled, risk-adjusted returns.

• The competitive landscape in crypto, including perpetual futures and stablecoins, is driving innovation and consolidation, with Maelstrom aiming to identify and scale key players.

Arthur Hayes and Adam Schlegel are spearheading Maelstrom's new private equity fund, seeking at least $250 million to acquire up to six crypto companies focused on trading and analytics. This initiative addresses a gap in the crypto asset management landscape by offering a structured buyout strategy for mature, cash-flowing businesses in the 'off-chain infrastructure layer' that often operate outside traditional financial hubs. The fund provides a cash-based exit for founders and a familiar, professional investment vehicle for institutional investors like pension funds and family offices, which find current crypto VC returns poor and lack suitable large-scale investment opportunities.

Maelstrom's PE Fund Strategy

• 00:05:34 The crypto industry has matured to a point where a controlled buyout strategy for scaled, sustainable, cash-flowing businesses makes sense. Maelstrom aims to acquire companies with $50 to $100 million in revenue and 30-50% EBITDA margins, which are currently underserved by traditional VC. The goal is to transform these businesses, increasing their revenue three to five times over two to four years, making them attractive for later-stage growth equity or traditional PE funds.

Evolution of Crypto Investment

• 00:06:56 Crypto asset management has evolved through cycles, from early Bitcoin beta funds like Pantera to the ICO boom, and then to crypto VC. Despite massive dry powder in large funds today, they struggle to invest in early-stage projects that need smaller checks. Maelstrom's private equity approach targets highly profitable, intrinsic crypto companies often overlooked by large VCs, offering an exit path for founders who prefer not to sell to exchanges that demand long earn-out periods.

Addressing Market Misperceptions

• 00:12:43 Many profitable crypto companies, particularly those outside New York, Silicon Valley, or London, are perceived as 'scary' or 'bullshit' by Western institutional investors due to geographical bias and lack of familiarity. Maelstrom aims to professionalize these businesses, making them attractive to traditional finance players like Robinhood or Charles Schwab. This strategy involves improving sales and product efficiency to increase profitability and valuation multiples, bridging the gap between crypto's native entrepreneurial spirit and TradFi's structured investment expectations.

LP Investment & Fund Structure

• 00:24:24 The fund caters to both crypto-native and crypto-curious LPs, including pension funds and sovereign wealth funds, by offering large-scale investment opportunities beyond the limited scope and compressed returns of crypto VC. Maelstrom employs a novel 'hub and spoke' structure, where LPs in the anchor fund receive discounted fees and preferential access to co-invest in Special Purpose Vehicles (SPVs) for larger acquisitions, allowing them to select deals they have high conviction in while benefitting from lower costs.

Due Diligence and Market Outlook

• 00:28:46 Maelstrom focuses on subsectors like trading infrastructure and employs a rigorous due diligence process similar to traditional private equity, collaborating with operating partners and consultants for technology audits, financial analysis, and management team evaluations. They are currently seeking control-stake buyouts of companies with a minimum of $25 million in revenue and 50% EBITDA margins. Despite some market frothiness, the fund plans to capitalize on potential valuation compressions in a future bear market, but remains ready to acquire opportunistic deals driven by founder needs at any cycle point.

Perpetual Futures Market

• 00:51:39 The perpetual futures market is rapidly evolving, with DEXs like Hyperliquid proving viable models by allowing token holders to benefit directly from revenue, unlike earlier platforms. Centralized exchanges are responding to this threat by offering near-zero-fee trading and developing their own perp DEXs to commoditize the service and potentially outcompete independent platforms. The long-term trend points towards decentralized perpetual exchanges becoming dominant, but the current period is marked by intense competition to control market share.