Fintech-Focused Vetamer Capital Shuts Down Hedge Fund
Vetamer Capital, an investor in public and private tech companies started by a Lone Pine Capital veteran just three years ago with $350 million to invest, has shut down its public-equities hedge fund and returned capital to investors, the firm said in a recent letter to its investors.
The San Francisco-based firm is a notable addition to the small but growing number of tech investment firms drastically curtailing ambitions as they struggle after two years of reduced valuations and sparse public offerings. Last month, venture capital firm OpenView, which managed $2.4 billion, said it would halt investments in new startups.
THE TAKEAWAY
• Firm founded by former analyst at Tiger cub Lone Pine
• Vetamer returns hedge fund capital to investors
• Firm made bets on fintech stocks such as Toast, PayPal
Vetamer, started in 2021 toward the end of one of the most ebullient market cycles for tech companies by former Lone Pine analyst Paul Eisenstein, told limited partners it had made the “difficult decision” to stop stock picking and return capital because rising costs of operating the business made it “difficult to maintain the caliber of team we have in the past.”
Vetamer didn’t tell investors whether it would continue to make new private investments. When the firm launched, it said it expected those would make up about one-third of its portfolio. It isn’t yet returning capital in its illiquid positions to investors, according to the letter.
But Vetamer only appears to have a skeleton staff remaining. In recent months, chief operating officer Hunt Hanover and two tech-focused investors, managing directors Ruth Bryson and Matt Heiman, left the firm, according to LinkedIn. The firm’s website is also no longer active.
Eisenstein launched Vetamer after 13 years at Lone Pine, a hedge fund started by Steve Mandel, a protege of Tiger Management’s Julian Robertson. Vetamer’s initial focus was fintech companies, and it’s invested in privately held financial tech firms including Carta, Monzo, Airwallex and Mercury. The firm had also invested in bankrupt cryptocurrency exchange FTX.
Some of its larger public positions at various points included fintech firms that have struggled to increase their share price or keep pace with the broader market, including PayPal and Toast, according to public filings. PayPal stock is down about 20% over the past year, while Toast is up only 4%. The S&P 500 Index, meanwhile, has gained about 22% during that period.
Fintech has been particularly hard hit since the Federal Reserve started to raise interest rates in 2022. Vetamer, in its letter, said that “fintech has been challenged by the macro environment.”
“It will take more time for the cycle to play out so fintech can deliver consistent performance,” the firm wrote to limited partners.
Eisenstein declined to comment.
Some larger tech-focused crossover funds have continued to feel the sting of reduced tech valuations. D1 Capital, an investor in grocery delivery firm Instacart and fintech Ramp, finished 2023 up just 0.8%, following a big loss in 2022, Bloomberg reported.