Cryptocurrency Firm BlockFi Secures $350 Million in Series D Funding

Recent growth within the cryptocurrency sector is demonstrably highlighted by the expansion of companies operating in this space.

BlockFi, a prominent player in the crypto market, has announced the successful completion of a $350 million Series D funding round, resulting in a company valuation of $3 billion. This news is particularly noteworthy considering the startup secured $50 million in Series C funding just last August, at a valuation of $450 million.

Company Origins and Early Growth

Founded in 2017 by Zac Prince, who has a background in consumer lending, and Flori Marquez, BlockFi is headquartered in Jersey City, New Jersey. The company initially raised $1.6 million in a seed funding round in 2018, led by ConsenSys Ventures with participation from SoFi.

Prince characterizes BlockFi as a comprehensive financial services provider tailored for cryptocurrency investors, offering a range of products for both retail and institutional clients. Retail users can leverage the mobile app to earn yields on their crypto assets – currently 6% on Bitcoin and 8.6% on stablecoins – and engage in buying and selling activities. Furthermore, they can access low-cost loans collateralized by their crypto holdings, providing liquidity without requiring asset sales.

BlockFi also functions as a lender and provides trade execution services to institutions involved in digital asset markets.

Significant Expansion and Key Metrics

Since the close of 2019, BlockFi has experienced substantial growth, expanding its client base from 10,000 to over 225,000. Currently, the company serves 265,000 funded retail clients and more than 200 institutional clients.

To date, BlockFi has facilitated over $10 billion in loans to its diverse client base, encompassing retail, corporate, and institutional entities.

Over the past year, the company has achieved the following milestones:

• Increased its total assets under management to $15 billion, a significant rise from $1 billion in March of the previous year, maintaining a 0% loss rate across its lending portfolio since its inception.
• Achieved a monthly revenue exceeding $50 million, compared to $1.5 million a year earlier.
• Expanded its workforce to approximately 530 employees, up from 100 in March of the previous year.

“Our belief that digital assets represent the future of finance has been reinforced by our growing client base, which increased tenfold in 2020 and has more than doubled since the end of that year,” stated Prince.

Details of the Series D Funding

The Series D funding round was co-led by new investor Bain Capital Ventures, partners of DST Global, Pomp Investments, and Tiger Global, with participation from existing investors including Valar Ventures, Breyer Capital, Susquehanna Government Products, Jump Capital, and Paradigm. As part of the financing, BlockFi employees with over one year of tenure have the opportunity to sell a portion of their equity through a secondary tender offer.

BlockFi attributes the strong investor interest in the Series D round to both its robust business growth and the increasing acceptance of cryptocurrencies as a legitimate asset class.

Marquez, the company’s SVP of operations, emphasized BlockFi’s mission to facilitate the mainstream adoption of cryptocurrencies, noting that current market trends increasingly support this objective.

Bain Capital Ventures Partner Stefan Cohen echoed this sentiment, highlighting the limited banking services currently available to cryptocurrency holders, positioning BlockFi favorably to address this gap.

“As Bitcoin’s market capitalization surpasses $1 trillion and continues to grow, holders will seek opportunities to earn yield or borrow against their holdings for traditional purchases like homes and education,” Cohen explained. “BlockFi is uniquely positioned as the leader in providing simple, secure, and accessible financial services to cryptocurrency holders.”

Future Plans and Recent Challenges

The startup’s rapid growth demonstrates a clear demand for its services, according to Cohen.

Looking forward, BlockFi plans to launch its Bitcoin Rewards Credit Card in the second quarter, enabling clients to earn Bitcoin cash back on all transactions. The newly acquired capital will be used to expand its product offerings, enter new global markets, and pursue strategic acquisitions. The company also intends to double its headcount by the end of the year, as per Prince’s announcement.

BlockFi currently serves a global clientele, with retail clients in over 100 countries. Last year, the company established institutional client service offices in London and Singapore, and plans to expand regional support in Europe, APAC, and Latin America for its retail clients this year.

Recently, BlockFi addressed a security incident on March 7, where the platform was targeted by an attacker who initiated a large number of fraudulent sign-ups and disseminated abusive content. The company confirmed that no client data was compromised and that the incident was contained.

“Our clients’ funds and data were safeguarded throughout the incident,” the company stated. “We have implemented measures to prevent similar occurrences in the future and have directly contacted affected email recipients to apologize for the inconvenience.”