Cloudwall Capital, a new digital asset risk management startup based in United States and Singapore, said Wednesday it has raised $6.3m in seed funding led by LocalGlobe and Illuminate Financial to help it build the tool to bridge the traditional finance world with digital assets and decentralized finance.

They were joined by a syndicate of investors including IA Capital Partners, Eberg Capital and NEMO Ventures, along with founder and operator angel investors from across decentralized and traditional finance, Cloudwall Capital said in a statement.

Cloudwall Capital said it will 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 to launch an early access program this summer.

“Digital assets underwent explosive growth between 2020 and 2021, with almost five years of growth taking place overnight. 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. We’re building Serenity to do just that and we’re excited about the potential for this platform to enable more people to invest in digital assets and unlock trillions of dollars of assets on the blockchain,” said Kyle Downey, Co-Founder and Chief Executive Officer at Cloudwall Capital.

Founded in 2021, Cloudwall Capital is building a new product, Serenity, which will provide institutional investors with the risk management insights to effectively build portfolios and manage risks inherent in digital assets so they can invest confidently. As the recent volatility in the digital assets market has shown, there is a clear need for a platform that can help investors assess risk and correlation more accurately, make better decisions when it comes to investing and demonstrate to their investors that they have institutional-grade stacks to assist their work.

“It’s becoming clearer to institutional investors that they should invest in digital assets if they aren’t already but they don’t have the tools to help them embrace this new market in a way they are used to. We’re building Serenity to provide this solution and supporting the careful growth of this industry. It’s incredibly rewarding to be working at the convergence of traditional finance with digital assets and there is so much potential for us to have an impact,” said Jia Yng Wee, Co-Founder and Chief Operating Officer at Cloudwall Capital.

Cloudwall Capital cloud-based platform Serenity combines risk management with research to give investors an overview of their assets and potential. It allows investors to pull in their portfolios and access historical data from a range of sources including centralized exchanges and blockchain data to analyse and demystify the digital asset market, including the ability to break down the entire market. The platform’s proprietary statistical and machine learning algorithms will also enable investors to run simulations and stress tests on their portfolios to see how they will behave. Serenity doesn’t offer advice to managers on what to do – instead, it provides clients with the data and insights to understand the context of what is going on and likely outcomes to support better decisions.

“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. 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,” Ilya Kulyatin, Co-Founder and Head of Research at Cloudwall Capital.

Meanwhile, LocalGlobe general partner Julian Rowe said: “Digital assets demand a different understanding of risk and correlation to traditional finance. Institutional investors, from crypto funds to traditional asset managers, want to invest in digital assets and decentralized finance as they capture a growing share of our economy. Unfortunately, few have access to institutional-grade models and tools at their disposal to understand risk, volatility and opportunity. Cloudwall Capital is building this insights layer and I’m looking forward to working with Kyle, Jia Yng, Ilya and the Cloudwall team as they take on this challenge and launch Serenity later this year.”

Illuminate Financial General Partner Alexander Ross also said: “Over the course of 2021 a large number of TradFi institutions, some of which are limited partners in our funds, started to invest in crypto assets. As a result, we are seeing significant demand for an institutional-grade risk management solution. Recent market conditions further exacerbate the need for risk management solutions and we believe strongly that Kyle, Ilya and Jia are the perfect team to build this.”

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