The Loan Machine Learns Bitcoin: Birch Hill Raises $4M to Put Debt Onchain 🌾

Birch Hill raised a $4 million seed round led by Multicoin Capital to develop blockchain-based private credit products for U.S. apartment, farm and energy loans. The New York startup also received backing from ParaFi Capital, Castle Island Ventures and Nascent, bringing total funding to $6.5 million.

CEO Bhavin Vaid previously worked as a Goldman Sachs investment banking analyst, held a private equity role at Cerberus Capital Management and co-founded crypto investment firm Halo Capital. Co-founder and COO Connor Flanagan spent more than four years at BlackRock, including working on its Aladdin risk platform, before joining Digital Currency Group and analytics firm Flipside.

Birch Hill operates three divisions. Its Vaults arm is an official curator on Morpho, an onchain lending protocol, where it assesses credit and sets risk parameters for vaults and markets. Its Strategies unit develops onchain credit products, including the Birch Hill Absolute Value strategy, while its Enterprise division has applied to FINRA for broker-dealer membership to place private credit offerings with verified accredited investors.

“Loan originators need new sources of capital, and onchain lenders need credit they can trust,” Vaid said in a statement. Longer term, Birch Hill plans to securitize pools of U.S. multifamily, agriculture and energy loans for onchain holding within the U.S. regulatory framework. The company met with the SEC’s Crypto Task Force in August and said banks, insurers and other fiduciaries are more likely to allocate to credit packaged in structures they recognize.

“Private credit is a fragmented, relationship-driven market, which makes it one of the clearest opportunities to build new financial infrastructure onchain,” said Shayon Sengupta, general partner and co-head of venture at Multicoin. The round will fund an eight-person team that includes Yearn veterans Brad Schlagel, who led development of Yearn v3, Ian Plosker and Alex Cornwell, as well as Traver Normandi, who joins from risk management firm Gauntlet to lead business development.

Birch Hill’s funding came as Coinbase separately introduced fixed-rate USDC loans backed by Bitcoin through Morpho. The product lets Coinbase users borrow the stablecoin against their Bitcoin with interest rates and repayment dates fixed when the loan begins, departing from the variable-rate model commonly used in onchain lending. Morpho also gained traction among traditional market participants through its role in Coinbase’s fixed-rate offering, while the SEC proposed Regulation Crypto Assets in August to enable certain token-sale fundraising models without full registration.