Babel Raises $40M in Funding - Crypto Asset Management

Babel Finance Secures $40 Million in Series A Funding

Babel Finance, a crypto financial service provider established three years ago, is experiencing significant growth in funding and partnerships with prominent institutional investors.

The company announced on Monday the completion of a $40 million Series A funding round.

Key Investors in the Round

• Zoo Capital
• Sequoia Capital China
• Dragonfly Capital
• Bertelsmann and BAI Capital (its Asian fund)
• Tiger Global Management

Shift in Institutional Investment

Historically, traditional investors demonstrated hesitation towards cryptocurrency investments.

However, 2020 marked a turning point, as numerous institutions and high-net-worth individuals began evaluating crypto assets as a viable investment option.

Capitalizing on a Growing Market

Babel Finance, with offices located in Hong Kong, Beijing, and Singapore, aimed to leverage this emerging opportunity.

The company sought to be among the first to facilitate the allocation of crypto assets within investors’ portfolios.

Building Trust and Credibility

A crucial step in achieving this goal involved securing the trust of investors.

One strategy was to attract reputable private equity and venture capital firms to become stakeholders in the company.

Strategic Funding Round

Yulong Liu, Babel’s head of global partnerships, explained that the funding serves as a “brand boost” to attract more institutional clients and enhance credibility.

Notably, this round was considered strategic as Babel Finance had already “reached profitability” and “wasn’t actively looking for funding.”

Future Plans and Expansion

To attract institutional customers and high-net-worth individuals, Babel Finance intends to allocate the new capital to several key areas.

These include product development, compliance initiatives, and talent acquisition, with a particular focus on recruiting banking professionals and legal experts to address regulatory requirements.

The company currently employs 55 individuals.

Drivers of Institutional Interest

The increasing interest from mainstream investors is partly attributed to the perception of Bitcoin as a hedge against “solvency and credibility risks” amidst global economic uncertainties stemming from the Covid-19 pandemic, according to Liu.

“Bitcoin is not something controlled by the government,” he stated.

Elon Musk's Impact

Another significant catalyst was Elon Musk’s $1.5 billion Bitcoin purchase in February, coupled with Tesla’s announcement to accept the digital token as payment.

This announcement triggered a substantial rally, driving Bitcoin’s price above $40,000.

Evolution of Babel Finance

Babel Finance’s development mirrors the broader industry trajectory.

Initially, the startup catered to crypto miners and traders, offering deposit and loan products.

Currently, it provides a comprehensive suite of asset management products and services designed for enterprise clients globally.

The company is actively pursuing relevant financial licenses in North America and Asia.

Key Metrics and Growth

As of February, Babel Finance’s crypto lending business had an outstanding balance equivalent to $2 billion in cryptocurrency.

The firm has served over 500 institutional clients and processes approximately $8 billion in direct trading volume monthly.

Institutional clients currently account for 80% of the company’s revenue.

Babel Finance aims to manage one million Bitcoins within the next four years.