Wednesday, 12 August 2020

Crypto Lending Startup, BlockFi, Gets Over $18 Million Led by Valar Ventures to Expand Product Line

A leading wealth management solution for crypto investors, BlockFi has revealed that it has raised $18.3 million in Series A funding led by Valar Ventures as the firm eyes an international expansion and the roll-out of new financial products, CoinDesk reports.

The firm’s Series A included a number a previous investors, including Morgan Creek, Winklevoss Capital, Galaxy Digital, ConsenSys Ventures, Akuna Capital, Avon Ventures, Susquehanna, CMT Digital and PJC.

Valar, a New York-based and fintech-focused VC firm, led the funding round. Valar has previously led Series A financings in several prominent fintech companies including Transferwise, N26, Qonto and Petal. Notably, BlockFi is Valar's first investment that directly touches the cryptocurrency sector, said BlockFi CEO Zac Prince.

James Fitzgerald the general partner at Valar Ventures explained that BlockFi is building incredible infrastructure to allow people to invest in cryptos with ease. He said:

“Outside of all the hype and volatility of the crypto trading markets, there are teams, like BlockFi, that are building the infrastructure to allow investing in digital assets to become mainstream. We are excited to help BlockFi build robust ‘picks and shovels' for this emerging asset class.”

BlockFi was the first company to receive institutional funding for crypto-backed USD loans, in the form of a $50M lending facility from Galaxy Digital. It also raised $4 million in convertible debt instruments in a December fundraise, and an undisclosed extension by Coinbase Ventures earlier this year.

The company's second product enabled crypto investors to earn interest on their assets and participate in the rapidly growing crypto-lending market.

BlockFi CEO & Founder Zac Prince said that the funding will allow his company to increase the number of employees so as to meet its vision. He said:

“We're excited to continue development at BlockFi that will bring us closer to our vision of a world where access to wealth-building financial products and services are not limited by geography or an individual's net worth. Our talented team and strategic backers will continue to drive the crypto financial services infrastructure forward to facilitate adoption and value creation in the crypto ecosystem.”

While BlockFi is currently in the business of lending and paying interest on deposited Bitcoin, stablecoins, and Ether, the lender has its sights set on diversifying its product offering in order to reach a wider mainstream audience.

Prince said that he views BlockFi not as a bank, but as a fintech company in the mold of SoFi; the privately-owned lender which first built its business around student loans to Ivy League borrowers. It’s since gone on to become a one-stop shop for mortgage, personal loans, checking, and even an investing platform which will soon offer crypto trading.

He said the firm will continue to move into phase 2 of its roadmap, which will include the rolling out of a Bitcoin rewards credit card, and would complement its existing crypto loan and interest-yielding saving account products. Phase 3 includes expansion into new emerging markets, such as Latin America.

The new credit card product will require a new product manager, a new compliance official, and other technical resources.

As for other changes that could come to the platform, Prince hinted at the possibility of eliminating minimums for Bitcoin deposits. Do you think BlockFi will revolutionize the crypto industry? Let us know in the comments section.

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