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BlockFi, a service that allows its users borrow fiat using crypto deposits, has just bagged $18.3 million in its Series A funding. The funds will reportedly be used to expand its products and employee base.
New York-based cryptocurrency lender, BlockFi, has successfully raised $18.3 million in a Series A funding round which was led by Valar Ventures. The funding round also saw contributions from other heavy names in the cryptocurrency sector including Winklevoss Capital, Galaxy Digital, ConsenSys Ventures, Akuna Capital, Avon Ventures, Susquehanna, CMT Digital, Morgan Creek Digital and PJC.
Valar Ventures is only one of three venture firms founded by Paypal Co-founder Peter Thiel. Thiel is not new in the crypto sector and last year, the Valar boss invested in Block.one and Layer1, two other cryptocurrency projects. Valar itself has also previously invested in other fintech firms including N26, Transferwise, Qonto and Petal.
James Fitzgerald, a Valar general partner, has expressed enthusiasm about the project and its opportunities. According to him:
“We are excited to help BlockFi build robust ‘picks and shovels’ for this emerging asset class.
In 2018, BlockFi successfully raised seed funding to the tune of $1.5 million, from ConsenSys Ventures, SoFi, and Kenetic Capital. It then went on to become the first firm to get funding earmarked for cryptocurrency loans in the U.S., after it received $50 million from Galaxy Digital Ventures, a crypto and blockchain technology outfit led by a popular billionaire, Michael Novogratz. These funds were used to create a facility letting BlockFi customers borrow fiat cash using cryptocurrency (Bitcoin and Ethereum) as collateral.
BlockFi founder, Zac Prince, recently told Bloomberg that the loan facility offered has gotten so many users that the company’s gross monthly revenue has surged 10 times since January. A parallel can be drawn between this much revenue and the fact that Bitcoin was trading at $3,000 at the beginning of 2019 and is now heading towards $12,000 at the moment. Prince has also mentioned that based on the current growth rate, BlockFi should be able to pull an eight-figure annual revenue before the year is over.
A company statement has revealed that BlockFi will be using the raised funds to beef up its current products and services, an expected move, especially with the figures it’s pulling.
The firm will be increasing its staff strength along with the new products and earlier in the year, the company already floated a new product for savings that allows investors pull in significant earnings on their holdings, promising 6.2% in annual returns. Its crypto-backed loans will still be run, allowing customers borrow fiat after making a minimum deposit of $20,000 in cryptocurrency.
Valar co-founder, Andrew McCormack, has also spoken on BlockFi and its push for financial ease. According to him:
“What’s very interesting about BlockFi is how they are bringing traditional financial services to this world. As the cryptocurrency markets evolve, you will start to see more and more companies that provide a lot of block-and-tackling that traditional banks or other market makers have provided in the fiat world for centuries.”
Even though BlockFi is not insured by the Federal Deposit Insurance Corporation (FDIC), it has expressed a strong operational method with compliance at its base. Prince explained this saying
“Because it’s a new market, there’s not going to be the same levels of protection or development that exists in markets that are backed by the federal government. Our job is to build these products, give individuals who want access to them an easy way to interact with them.”