(Bloomberg) -- Peter Thiel-backed Valar Ventures led an $18.3 million financing round for a crypto-lending startup that plans to launch additional products including a crypto-rewards credit card.
Other backers in BlockFi Inc.’s series A offering include billionaire Mike Novogratz’s Galaxy Digital Ventures LLC, Winklevoss Capital, ConsenSys Ventures and Akuna Capital, the crypto firm said Tuesday in a statement.
BlockFi will use the cash to double the number of employees to 60 this year, build new products and enter additional markets beyond the U.S., founder and Chief Executive Officer Zac Prince said in a phone interview.
“What’s very interesting about BlockFi is how they are bringing traditional financial services to this world,” said Andrew McCormack, Valar’s co-founder. “As the cryptocurrency markets evolve, you will start to see more and more companies that provide a lot of block-and-tackling that traditional bank or other market makers have provided in the fiat world for centuries.”
The crypto firm has seen monthly revenue grow more than 10-fold since January as Bitcoin prices rebounded and surged past $12,000 in June. The New York-based company expects annual revenue to hit eight figures by year-end, Prince said, without being more specific.
Valar, one of three venture firms backed by Thiel, has invested in fintech businesses including Paris-based banking startup Qonto, millennial-focused credit-card issuer Petal, Berlin-based startup Number26 and TransferWise, a U.K.-based money-transfer service. BlockFi is Valar’s first cryptocurrency-related investment.
Thiel has long been bullish on Bitcoin. His Founders Fund has amassed hundreds of millions of dollars of the cryptocurrency, according to a January report in the Wall Street Journal. The PayPal Holdings Inc. co-founder and Facebook Inc. board member is worth more than $3 billion, according to the Bloomberg Billionaires Index.
In March, BlockFi debuted a savings account that promises as much as 6.2% in annualized returns and has since gathered about $250 million in assets. The two-year-old company also offers crypto-backed loans, allowing clients to deposit a minimum of $20,000 in digital currency in exchange for fiat loans.
The accounts are not insured by the Federal Deposit Insurance Corp. and funds can be used by the lender for its own purposes. Monthly interest rates also are subject to change at BlockFi’s discretion, which happened in July, as the firm cut rates for accounts containing more than 10 Bitcoin.
“Because it’s a new market, there’s not going to be the same levels of protection or development that exists in markets that are backed by the federal government,” Prince said. “Our job is to build these products, give individuals who want access to them an easy way to interact with them.”
BlockFi received $50 million from Galaxy Digital last year to fund crypto-backed dollar loans.
Read more: Crypto Diehards Turn to Interest-Bearing Accounts After Meltdown
To contact the reporter on this story: Jasmine Teng in New York at firstname.lastname@example.org
To contact the editors responsible for this story: Pierre Paulden at email@example.com, Steven Crabill, Dan Reichl
For more articles like this, please visit us at bloomberg.com
©2019 Bloomberg L.P.