💹Market
What is the market size?
The market size is represented as the total fees generated by the fund managers every year.
Total Addressable Market (TAM): $3.36 trillion/year for all collective investment schemes.
Serviceable Available Market (SAM): $690 billion/year for alternative investment funds.
Serviceable Obtainable Market (SOM): $18 billion/year, targeting 10% of European AIFs.
Early Adopters Segment: Approximately $900 million/year, focusing initially on digital asset funds.
Needless to say, the investment fund industry is massive. We want to focus on a specific part of the market: the Alternative Investment Fund industry. Initially, we will start with digital asset funds. Web3 VCs, Crypto hedge funds, or other tokenized private equity funds. That’s because these fund managers are the ones most familiar with this technology and more likely to adopt it:
What are the dynamics of the market?
One of the market driver for us is the rate of tokenization: more and more assets are being represented on-chain, expected to reach $16.1Tr by 2030, this is pushing the entire financial system to adopt innovative solutions like Fume.
Why Now?
Building Fume now is strategically aligned with several pivotal developments in the financial and regulatory landscape that underscore the potential and the necessity for Fume in the current market:
PwC Crypto Hedge Fund Report 2023 Insights:
The PwC Crypto Hedge Fund report 2023 states that "23% of crypto hedge funds plan to tokenize units of their fund in the future." This significant interest in tokenization from a substantial portion of crypto hedge funds illustrates a clear trend toward the adoption of blockchain technology for fund management and operations.
Project Guardian and the Shift Towards Asset Tokenization:
Project Guardian represents a collaborative effort among policymakers and the financial industry to explore and evaluate the practical applications of asset tokenization and decentralized finance (DeFi) within a controlled environment. The involvement of major financial institutions like UBS, Franklin Templeton, and JP Morgan in testing the tokenization of funds highlights the growing institutional interest in leveraging blockchain technology to innovate traditional financial products and processes.
New Investment Fund Regulations:
The introduction of new investment fund regulations, which allow for the creation of funds without a depositary bank, marks a significant shift in the regulatory approach towards fund management. These regulations open the door for more flexible, efficient fund structures that can leverage blockchain technology to reduce operational costs and complexity.
Tokenization of Real World Assets:
On-chain asset tokenization for stocks, real estate, commodities, and private equities is growing at an outstanding rate. The institutional adoption and regulatory clarity around digital assets reached in recent years are now reshaping the Fund industry requiring on-chain fund management solutions. Now it’s the right time to build the on-chain fund management infrastructure.
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