Swimming with Allocators · Earnest Sweat, Alexa Binns

Concentration Over Diversification: A New Era for Crypto Fund-of-Funds

·44 min·2 clips

"Access is not a strategy anymore" for a breakout crypto manager or project.

1. Swimming with Allocators interviews Diego de Colombras about Descent Capital and concentration in crypto fund-of-funds. 2. Diego is the founding general partner of Descent Capital, and hosts Alexa Benz and Ernest Stepp frame him as a crypto allocator with experience at B37 Ventures. 3. The episode asks why Descent backs only crypto venture vehicles, only emerging managers, and only pre-seed or seed funds. 4. Diego says he started in equity research at UBS covering telcos and transportation before moving into real estate and BCG work in the U.S. and Latin America. 5. He says Kellogg pushed him closer to technology and led him to venture capital in Silicon Valley six years ago. 6. At B37 Ventures, he worked in a quasi-fund-of-funds model with direct startup investments and close collaboration with tier-one San Francisco firms. 7. He says that role taught him how GPs develop theses, deploy capital, manage boards, and handle exits. 8. Diego links his interest in crypto to 2018 and 2019, when Bitcoin’s monetary debasement thesis resonated with him as a Mexican and a “kid of the 80s.” 9. He cites the 1994 tequila crisis and the peso’s roughly 10x devaluation against the dollar as a personal macro memory. 10. He says he later saw blockchain as a distributed-ledger platform shift that could matter across enterprise technology. 11. Diego says Descent’s inspiration came from Sandana Capital and from specialized crypto fund-of-funds that were already active across multiple crypto cycles. 12. He argues that generalist crypto allocators may underwrite emerging managers with less rigor than a verticalized firm focused only on that niche. 13. He cites Samir Kaji’s probability-of-permanent-loss framework and says diversification helps, but the benefit is not linear forever. 14. He says the ninth underlying fund can get close to 1% permanent-loss risk, but extra diversification can reduce return asymmetry. 15. Diego says he worries more about managers misunderstanding crypto cyclicality than simply reacting to volatility. 16. He says Bitcoin’s four-year halving cycle, Fed liquidity, and vintage timing all affect crypto venture deployment. 17. He points to Practice and Jave Meegan as an example of a manager with a “verifiable right to win,” a technical team, and a thesis around infra, middleware, and AI in crypto. 18. The interview stays conversational and LP-focused, with Alexa Benz and Ernest Stepp pressing Diego on portfolio construction, manager selection, and fund structure. 19. Listeners who care about crypto allocators, emerging managers, and LP strategy will get the most from this conversation. 20. Listeners seeking token price talk or broad retail crypto coverage may skip it.

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