Blockchain.com, a London-based firm that provides a variety of cryptocurrency services to retail and institutional clients, raised $300m in a deal that highlights venture capital’s growing willingness to jump back into the bitcoin frenzy.
The investment round gave the company a $5.2bn valuation and was led by DST Global, Lightspeed Venture Partners and VY Capital. It comes just one month after the company raised $120m in a funding round that valued it at $3bn.
Blockchain.com has 31m verified users across 200 countries and 70m digital “wallets,” or software used to store bitcoins. The firm offers retail trading and a range of services for professional investors like credit, structured products, trading and custody. Between debt and equity, the company has raised $1.5bn since its inception in 2011, according to chief executive Peter Smith.
It is a significant amount for a crypto company. The latest capital raise is the third-largest in the industry’s short history, according to research firm CB Insights. In 2018, Bitmain Technologies raised $400m. Earlier this year, BlockFi raised $350m and in 2020, Bakkt raised $300m.
Capital raising also stagnated over the past few years as bitcoin’s price fell from its 2017 highs and remained down. After raising $4.5bn in 2018, deals have declined to $2.7bn in 2020.
Their re-emergence this year, with three of the six largest to date coming in 2021, is spurring hopes that private investors are now returning.
They may be followed by public investors. Later this year, Coinbase Global will launch its highly anticipated initial public offering. The company plans to sell up to 115m shares on Nasdaq, raising up to $943m, according to its most recent filing with the Securities and Exchange Commission.
If that IPO is successful, other crypto companies are expected to follow. Whether Blockchain.com will be one of them hasn’t been determined. “The company is carefully considering its public market options,” said Smith.
Blockchain’s business has more than doubled since the start of the year, Smith said, amid a boom for bitcoin and other cryptocurrencies. If the current rate stays constant, he predicted the company’s 2021 profit would hit a record in the “mid-nine digits.”
That is mainly because the price of bitcoin has skyrocketed over the past year. In March 2020, bitcoin fell to around $5,700. On 23 March, it was trading around $55,000. The gains have been driven by an influx of money from the likes of billionaire investors including Paul Tudor Jones, companies including Massachusetts Mutual Life Insurance a new wave of retail, or nonprofessional, investors.
The company plans to use the new capital to hire new employees and to support its institutional business. “The institutional side requires more capital,” Smith said. “When you’re pitching asset managers they want to see a big balance sheet.”
From The Wall Street Journal