Ripple boss Brad Garlinghouse announced plans to take the company public ‘in 12 months’ at Davos 2020. With XRP prices dropping by around 46% last year, will Ripple IPO boost it’s token’s price this year?
Since 2012, Ripple along with its native crypto token XRP has gathered significant prominence in the blockchain and the cryptocurrency space. So much so that currently XRP is the 3rd largest digital asset in the world while Ripple has plans for an IPO.
The company has primarily been privately funded since 2013. With prominent VC players such as Andreessen Horowitz, IDG Capital Partners, Google Ventures, SBI Holdings participating in funding rounds to date, Ripple has raised close to $292 million (along with capital raised from cumulative funding).
At $200 million, the enterprise payments firm secured the highest amount from private funding in the last 8 years of its existence. From what it seems Ripple has been netting money pretty smoothly from VCs. Not to mention it’s revenue model which primarily consists of XRP sales (to financial institutions and retail investors through crypto exchanges). Then why does the company need to go public?
Ripple CEO Sensed Losing VC Interest in Crypto/Blockchain Startups
In an interview with the Wall Street Journal at the World Economic Forum 2020, Ripple CEO Brad Garlinghouse hinted that a slew of crypto/blockchain companies will go public with their respective IPOs this year.
“I’m bullish on BTC as a store of value, but not for payments. You don’t want to use BTC at Starbucks b/c by the time you get your coffee, it’ll be cold.” –@bgarlinghouse at @WSJ Journal House … good point on why there won’t be one crypto to rule them all! pic.twitter.com/c89KrFILoc
— Asheesh Birla (@ashgoblue) January 23, 2020
The basis for Garlinghouse’s claims cannot be ascertained but recent data shows that his predictions may come true. As per a report published by CB Insights on January 22, there was a significant drop observed in venture capital funding for blockchain companies in 2019.
Total equity funding to blockchain startups dropped more than 30% last year compared to 2018. Mentions of blockchain in public earning reports also declined. Ripple may have picked up the highest funding of $200 million amongst all crypto firms in Q4 2019 but even with that, the deal didn’t make it to the top 3.
Many blockchain startups are still trying to figure out a proper market fit for their products and services. This, in turn, may have driven private capital investors away from the idea of pouring funds in these firms. Consequentially the dip in VC interest will force crypto/blockchain startups to raise money in public markets.
Ripple CEO Was Right, Crypto IPOs Are Indeed On The Rise
The crypto IPO trend had already begun in late 2019 with pro-crypto Silvergate Bank offering its shares for trading on the NYSE and Canaan going public on Nasdaq.
This year more crypto and blockchain-based companies are looking to become key players in the global financial space. Swedish crypto exchange BTCX is planning to launch its IPO in Q3 2020 and INX has already submitted paperwork to the US SEC to launch a New York-based IPO.
The ICO bubble of 2017 was a serious blow to the genuineness of the crypto industry. Many so-called ‘upcoming digital asset and distributed ledger technology companies’ were charged with hefty fines and subpoenas for defrauding investors and violating fund-raising norms. Therefore, startups with their plans to go public are actually looking for a fair dose of mainstream financial acceptance and credibility in raising capital.
And that’s exactly what’s driving Ripple. Although the company has a solid track record of raising funds through credible and globally recognized investment forms, it is looking for something more. It is pretty clear through its partnerships with numerous banking and financial institutions throughout the world, that Ripple wants to be a key force moving the needle in international finance. But how will this move affect the price of XRP?
XRP’s Performance Will Depend on These Two Factors
Ripple going public will allow investors another way to invest in the company: shares. But will it take the limelight off XRP as an investable asset? There are a lot of commentaries regarding this, especially on social media. Lots of folks think that the coin will drastically lose its value.
WTF . $XRP is planning to do an IPO??? As if printing worthless coins, pumping it and making billions of dollars wasn't enough?
Send this shitcoin to absolute depth of hell.https://t.co/VMFosCo1BZ
— Anondran (@AnondranCrypto) January 24, 2020
As per AgoraDesk, the thing is by going public, Ripple will have to share it’s balance sheets with institutional investors and the public. Folks will get to know the finances behind the ongoing XRP sales. If a majority chunk doesn’t like how the business model works, things might go south for XRP.
But if XRP is declared a commodity, you know where the price could go.
Kevin Wilson, Blockchain enthusiast and passionate crypto trader. Determined to make the complexity of the Crypto markets seem simple for ordinary folk.