Crypto company BlockFi secures $ 30 million in funding, Silicon Valley legend Peter Thiel's venture capital agency leads again

BlockFi today announced $ 30 million in funding.

In 2018, the New York-based company raised $ 1.55 million in funding with almost no fanfare, breaking the cryptocurrency landscape. At the time, the company positioned itself as a retail lender-a platform where users could store their own Bitcoin or Ethereum and ensure high yields.

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But the company has grown rapidly since then, locking in $ 18.3 million in venture capital last August and then announcing another $ 30 million in funding on Thursday. Now holding cash, the company is looking for new opportunities, including expanding its institutional loan business, retail brokerage business, and new Bitcoin rewards credit cards.

Participants in this round include previous investors such as Morgan Creek Digital, Akuna Capital, Avon and CMT Digital under Fidelity, and new investors such as HashKey Capital and Castle Island in Hong Kong Ventures. In addition, Silicon Valley investment legend Peter Thiel's Valar Ventures is an investment institution focused on fintech. Its portfolio includes well-known companies such as Stash, TransferWise, and N26. It led BlockFi ’s previous financing in August. Later, Valar led the round again.

Valar Ventures' general partner Andrew McCormack said in a published statement:

"BlockFi has always been one of the most successful companies we have invested in."

Since BlockFi started lending in January 2018, the company currently has more than $ 650 million in assets on the platform, and its loan portfolio has a loss rate of 0%. BlockFi's revenue in 2019 has increased more than 20 times.

"Diversified Financial Services Entities"

In a sense, BlockFi is more like fintech than cryptocurrencies, following the road of companies such as SoFi and Robinhood, they entered the market with an initial product that was designed to dissolve traditional financial service functions and then expand to New products bundled in the same platform.

BlockFi Chief Executive Zac Prince said in a telephone interview:

"We will be less and less connected with the crypto loan category, and more and more people will see our company as a diversified financial services entity."

As mentioned earlier, BlockFi has launched its own retail broker that can provide similar services to giants like Coinbase. The new product makes sense to consumers, and they don't need to transfer funds from BlockFi for transactions. This stickiness allows the company to manage more funds, which makes it a more attractive partner for high-frequency trading companies looking to capture retail traffic and close out loan transactions.

So far, this business launched last year supports Bitcoin, Litecoin and Ethereum. In the first month, its transaction volume reached $ 10 million. The company plans to launch its own native app in 2020.

Prince said the success of the trading function has affected financing activities to some extent. Such businesses require higher capital reserves.

However, the company doesn't have to go hand in hand with the exchange because they want to leave the core liquidity matching function to "experts."

Elsewhere, the company is expanding its entire addressability through plans to offer a bitcoin rewards credit card (a common credit card, a normal credit card that returns cash in bitcoin) by expanding customers who do not currently own cryptocurrencies market. First of all. The company is working with existing banks and credit card companies to develop a credit card product, and may launch other robotic advisory services such as tax loss collection, retirement account support and auto investment features.

The company currently has a job as the head of payment products, overseeing the strategy to enter the market, and developing payment products, including credit cards, debit cards, in the BlockFi ecosystem.

Indeed, credit card products will require large amounts of cash for marketing and reducing business risk.

"We want to be able to do this with confidence from a financing and marketing perspective," said Prince.

"As we study more about credit cards, we think we can bring it to more mainstream audiences."

To this end, the company hopes to increase its marketing budget by 30 times.