Xapo, a California-based online bitcoin wallet provider, gained $40 million in funding, thus becoming the best-funded bitcoin company until now.
During the second Series A-1 funding round, the startup raised $20 million in total. Led by Greylock Partners and Index Ventures, the round involved Emergence Capital Partners, investor Yuri Milner, former CEO of Yahoo Jerry Yang and PayPal co-founder Max Levchin.
In March, Xapo commenced the first round of fundraising, spearheaded by Ribbit Capital, Fortress Investment Group (FIG) and Benchmark Capital. It was the second largest public round in the bitcoin industry.
Xapo noted in its blog post that the raised money will have a positive impact on the bitcoin ecosystem.
The firm’s founder and CEO Wences Casares announced that Reid Hoffman and Mike Volpi were appointed as new board members. They will join Matt Cohler as the company’s board observers.
Casares said that Volpi and Hoffman have a “proven history of recognizing emerging technologies before they reach the masses.” Besides, they participated in developing such digital innovations as payment system PayPal, an online audio distribution platform SoundCloud and social networking service Facebook.
According to Xapo’s CEO, the firm is aimed at further developing the bitcoin ecosystem. Moreover, the company intends to increase public awareness of the technology.
Wences Casares said: “Looking ahead, we will continue to invest the funds in building our team and our suite of services. We are committed to developing the framework that allow bitcoins to be used by consumers in their everyday lives while also continuing to offer highly secure bitcoin storage for Wall Street funds, exchanges, and financial institutions handling bitcoins.”
Index Ventures and Greylock Partners, the companies leading the funding round, gave their comments.
Greylock Partners noted in its blog post that bitcoin has potential as a currency, as an asset and as a platform for creating alternative financial applications. The firm added that the cryptocurrency has to raise security in order to succeed. The company pointed out: “Unfortunately, it is both costly and risky for consumers to build their own technology infrastructure, process and physical infrastructure to secure their bitcoins. Xapo has created a system where average consumers can be comfortable and secure with holding and using bitcoins.”
Index Ventures described bitcoin as a “baby in the financial markets” and also emphasized the problem of security level, which has to be increased. The company stated: “Bitcoin will never replace the US dollar or the euro, and that’s not its main goal. The more appropriate analogy for bitcoin is gold – a value system that doesn’t have a political affiliation, yet plays a part in overall monetary policy.”
The firm also added that it projects to invest in alternative payment systems, including BitPay, currency exchange services Oanda and bitcoin wallet providers like Xapo.