Today’s big news is not about the Bitcoin price for a change, but rather about CoinBase closing a US$75m financing round, the highest amount to date for any Bitcoin start-up company. This announcement couldn’t come at a better timing, as Bitcoin is still suffering from recent price drops, and is now hovering around the US$210 mark. Analysts expect this fund raising to serve as a “vote of confidence” for Bitcoin and Bitcoin-related companies.
CoinBase’s recent financing round was led by DFJ Growth, a company helping entrepreneurs to disrupt markets and build iconic companies. Bitcoin has been called disruptive ever since the digital currency started gaining more mainstream media attention, as it is a payment method for both online and offline purchases challenging more traditional payment methods such as cash and credit card payments.
The spirit of Coinbase employees and management is extremely high after this successful round of financing. Fred Ehrsam, one of the Coinbase co-founders, stated the following : “Investors still have a pretty high conviction on Bitcoin despite what the spot price of Bitcoin is doing, This really is people putting their money where their mouth is in terms of betting on Bitcoin as a technology trend.”
Even though the news about CoinBase’s successful financing round was only made public today, company sources told CryptoArticles that the financing round had actually been completed in the middle of December 2014. This would put this “vote of confidence” ahead of the recent Bitcoin price crash. However, regardless of the price crash, the news is greatly appreciated by the Bitcoin community.
This financing round is not the first in Coinbase’s history, as the San Francisco-based start-up has raised over US$105 million in venture capital to date. During december of 2013, a US$25 million investment round was led by Andreessen Horowitz, whom also participated in the recent fundraising along with existing investors Union Square Ventures and Ribbit Capital.
While most of the focus will be on the incredibly large amount of funds secured by CoinBase, the announcement has other ramifications as well. This round of funding can be seen as a “nod of approval” from the established financial sector, which Bitcoin is attempting to disrupt ever since its inception in 2009. Moreover, some interesting players are invested in CoinBase as of now, including the New York Stock Exchange and the Spanish bank BBVA.
CoinBase has been leading the charge to help merchants, such as Overstock.com and Dell, integrate Bitcoin payments into their existing platforms. But that is not all, as CoinBase has expanded their market of operations to no less than 18 different European countries, including Belgium, The Netherlands and France.
However, this successful financing round is only part of the work, as CoinBase needs to keep working on their business model and strategy. As of right now, CoinBase relies on people willing to buy, sell and hold Bitcoins. However, this also creates the “hoarding” problem, which has been touched upon by many Bitcoin developers and enthusiasts over the past few months.
CoinBase has indicated they plan on expanding their service to “à countries by the end of 2015, as well as bring even more (major) merchants on board. On top of that, platform improvements for both developers and customers, as well as enhanced mobile technology are also on the priority list.
To date, CoinBase hosts 2.1 million consumer Bitcoin wallets, and 38,000 merchants make use of the tools offered by their platform.
Barry Schuler, a managing director of DFJ Growth, added the following : “You have to have a feel for how to engage consumers. That’s the real spark you see with these guys. If we thought there was a huge risk of Bitcoin going away, we obviously wouldn’t have made this investment.”