Last year, we told you about a New York-based startup that had begun lending cold, hard, cash to cryptocurrency holders who don’t want to offload their holdings but also don’t necessarily want so much of their assets tied up in cryptocurrencies.
Today, that two-year-old company, BlockFi, is announcing $18.3 million in Series A funding led by Peter Thiel’s Valar Ventures, with participation from Winklevoss Capital, Morgan Creek Digital, Akuna Capital and earlier backers Galaxy Digital Ventures and ConsenSys Ventures.
Apparently, BlockFi is gaining some traction.
Last year, after raising $1.5 million in seed funding from ConsenSys Ventures, SoFi and Kenetic Capital, it secured $50 million led by Galaxy Digital Ventures (the digital currency and blockchain tech firm founded by famed investor Mike Novogratz) that is used to loan out cash to customers who use their bitcoin and ethereum holdings as collateral.
The minimum deposit required: $20,000 worth of cryptocurrency.
According to founder Zac Prince, who talked with Bloomberg about BlockFi’s newest round, enough people are now using those loans that BlockFi has seen its monthly revenue grow more than 10 times since January.
No doubt the uptick in loans correlates with the rebound in Bitcoin’s value, which was priced as low as $3,400 earlier this year but is now valued at roughly $11,400.
Prince also told the outlet that he expects annual revenue to hit eight figures by the end of this year. In startup land, that means it’s time to roll out new money-making services. BlockFi already introduced a savings account product earlier this year that it says enables investors to earn interest on their assets. They are not backed by the FDIC, though the company says it “operates with a focus on compliance with U.S. laws and regulations.” And while it won’t say exactly what’s coming up next, it says in a statement about the new round more products are being added to its existing platform.
Prince previously spent roughly five years in consumer lending and began investing his own money in crypto in early 2016.
He told us last year that his “lightbulb moment” for the company came as he was in the process of getting a loan for an investment property. Instead of using a traditional bank, he decided to list his crypto holdings to see what would happen, and the response was overwhelming. “I realized that there was no debt or credit outside of [person-to-person] margin lending on a few exchanges, and I had the feeling that this was a big opportunity that I was well-suited to go after.”
Other companies providing crypto-backed loans that are issued in fiat currencies include CoinLoan, SALT Lending, Nexo.io and Celsius Network, among others.