Today we’re announcing Birch Hill’s $4 million seed round, led by @Multicoin with participation from @ParaFiCapital, @CastleIslandVC and @Nascent. That brings our total funding to $6.5 million.
We started Birch Hill a year ago to do one thing well. Take good U.S. credit, do the work institutions expect, and deliver it to the capital that now sits onchain looking for transparent sources of yield.
Capital Onchain, Credit Offchain
Stablecoin supply is now over $300 billion. That money wants to earn a return, but there isn’t enough high quality risk for stablecoins to lend against. Most stablecoin capital gets lent to traders, so open interest onchain typically rises and falls with digital asset volatility.
At the same time, in a rising interest rate environment, industries that are the backbone of the U.S. economy, like real estate, energy and agriculture, are looking for more efficient sources of capital to scale and invest in growth. Rent, crop sales and energy production repay those loans, and little of that correlates with digital asset volatility.
Until now, the two sides have rarely met. Onchain capital moves fast and in short cycles, while traditional lending needs a long term outlook and patience. Before an institution lends against a loan, someone has to look at the borrower and the collateral, set the terms and stand behind the structure. Very little of that work has been done onchain. That is what we do. We assess, structure and distribute credit in one firm.
Compliance as our Path to Scale
We’re building Birch Hill inside the U.S. regulatory framework from day one. Banks, insurers and other fiduciaries put money into structures they recognize, and those structures take registrations, counsel and time to build. In August we walked the SEC’s Crypto Task Force through our plans, and the memo from that meeting is public.
Financial Services Holding Company
Birch Hill is a holding company, and each regulated activity sits in its own entity, so it is always clear who is responsible for what.
Birch Hill Labs - Curates onchain lending markets.
Birch Hill Strategies - Issues our tokenized credit securities (oABS).
Birch Hill Solutions - Works with 3rd party issuers in an advisory capacity
Birch Hill Digital Asset Management - Will manage our investment products.
Birch Hill Digital Securities - Has applied to FINRA to place private offerings with investors.
For the teams we work with, this comes together as three divisions.
Vaults - Currently we are an official curator on Morpho, with two vaults and the GRO/USDC market live on Base.
Strategies - Our Flagship Vaults and Birch Hill Absolute Value, an onchain credit strategy.
Enterprise - Once approved by FINRA, Birch Hill Digital Securities plans to place private credit offerings with verified accredited investors.
Next, we plan to bring pools of U.S. loans onchain, starting with multifamily, agriculture and energy. Birch Hill is building out its onchain issuance of tokenized credit securities (oABS) within these sectors to start.
Who Is Building It
We have never hired from a job posting. Everyone here worked with one of us before, or came to us through our closest partners and investors.
My background is in structured credit, starting as an originator on the CMBS desk at Goldman Sachs and later as an investor at Cerberus Capital. Connor Flanagan, our COO, and Jack Forlines, our CTO and Chief Risk Officer, founded Unit Zero Labs, which became Birch Hill Labs when we started the company. They spent years building risk and portfolio systems together at BlackRock.
Joining us now:
Jon Thomas, Head of Curation
Brad Schlagel, Portfolio Manager, Head of Strategy Architecture
Ian Plosker, Portfolio Manager, Head of Platform Engineering
Alex Cornwell, Head of Capital Formation
Traver Normandi, Head of Business Development
Jon has worked with Birch Hill since inception, and we’ve now formalized his role on the team. Brad, Ian and Alex join us from Yearn to lead Birch Hill Absolute Value (more coming soon). Traver joins from Gauntlet to help grow our curation and issuance business.
What the Round Is For
This round let us build the team we need to scale what we already have live, deliver what we’ve said we’ll build, and add the depth of expertise a regulated onchain financial services firm needs. Thank you to @ShayonSengupta and the @Multicoin team for leading this round, and to ParaFi, Castle Island and Nascent for backing us again.
As always, back to the lab.
Bhavin
Press Announcements:
Birch Hill - Business Wire Press Release
Decrypt - Birch Hill Seed Raise Announcement
Why Multicoin Invested in Birch Hill
This post is for information only and is not an offer to sell or a solicitation of an offer to buy any security or fund interest. Birch Hill Digital Securities LLC has applied to FINRA and is not a FINRA member.