Build Debuts Bitcoin-Backed Private Credit Fund
Build Asset Management, a registered investment advisor focused on public and private credit markets, has launched the Build Secured Income Fund I in collaboration with Unchained, a bitcoin-focused financial services company.
The fund, which started raising capital in June and is aiming for $100 million, is one of the first direct lending private credit funds to invest in over-collateralized consumer and business loans backed by bitcoin. The fund has so far raised $17 million.
The fund’s typical loans are interest-only, ranging from $25,000 to $100,000, with an average loan-to-value ratio of 40%.
“Since its invention in 2008, the Bitcoin protocol has seen steady growth and adoption across the world, and we see real potential in bitcoin serving as a widely adopted store of value and as quality collateral,” says John Ruth, co-founder and CEO of Jefferson City, MO-based Build.
There is also multi-signature collaborative custody and no rehypothecation in the fund. The keys are shared by the borrower, the loan originator, and a third-party agent. According to Build, the mechanism provides the borrower with transparency.
Bitcoin’s scarcity, caused by a hard cap of 21 million bitcoins released and a halving of fresh supply every four years, may improve the asset’s attractiveness for use as collateral over time, according to Build.
Unchained is the originating agent and servicer of the loans purchased by the fund.