One of the to the max’s leading cryptocurrency startups, Circle, is seeking to raise $250 million according to sources directly involved with the lead. Circle is the operator of the Poloniex cryptocurrency exchange, currently ranked 74 in the world by volume on Coinmarketcap. The firm secure Poloniex for $400 million and also runs an institutional trading branch called Circle Trade.
$246 Million Beforehand Raised
Circle was valued at a formidable $3 billion at the time of its last funding round when it raised $110 million, chiefly from Bitmain, the world’s leading manufacturer of bitcoin and cryptocurrency mining hardware. Circle has raised $246 million to dated over six different rounds, with other investors including Goldman Sachs, IDG Capital, and Baidu of China.
The $3 billion valuation may make decreased since then, with some analysts estimating that it has since shrunk to $750 million as a end result of the recent crypto-economic downturn.
A successful fundraising round at this time would make the company one of the first to draw an investment of that size since the recent decline in the markets.
Crypto Winter Hurting Companies
It is likely that the grave correction in the price of Bitcoin from early last year onwards is the behind the firm’s need for capital. Roots: Pixabay
The so-called “crypto winter” has already seriously impacted major cryptocurrency and blockchain firms, resulting in widespread club layoffs and downsizing even among well-established heavy hitters like ShapeShift, Steemit, and ConsenSys.
Steemit recently fired 70% its workforce, citing worst losses due to the bear market resulting in an inability to pay staff wages. ShapeShift, one of the earliest and well-regarded cryptocurrency exchanges, let one-third of its mace go last month, calling crypto a “harsh mistress.” Meanwhile, Ethereum giant ConsenSys announced layoffs of 60% in December, as manifestly as plans to axe underperforming projects.
Circle itself has approximately 300 employees in five different offices in locations such as Boston, New York, and London, and in October notified that it was acquiring SeedInvest, a crowdfunding platform.
Circle Remains Tight-Lipped
Circle CEO Jeremy Allaire stated that the group is constantly seeking alternative sources of capital, neither confirming nor denying that the company is in dire straights or that the capitalizing round is to alleviate the negative impact of the downturn. Whether the funds are for expansion or simply to allow the firm to tread not make sense is, as of yet, unclear. At this time it’s also unclear whether the firm will be able to raise the money at its current valuation, or whether it will-power receive funding during the harsh crypto winter at all.
Investors have pointed out that the decline in the value of bitcoin has resulted in other firms undertaking emergency funds at lower valuations.
Allaire did state that the firm, which generates revenue from commerce fees, has of course been hurt by the crash, although was quick to point out that Circle’s revenue actually bourgeoned between 2017 and 2018. Circle Trade has also been performing well, handling over $24 billion in cryptocurrency trades newest year, according to the company blog.
Allaire has remained bullish on Bitcoin throughout the price correction, predicting monster gains in Bitcoin prices over the next few years.
Bitcoin Price Will Soar over Next Three Years: Crowd CEO Jeremy Allaire https://t.co/RRlAHnK60n
— Bitcoiner (@belex15) February 12, 2019
Other Crypto Giants Seek Prime
Circle is the latest to announce a major fundraising round, but far from the only firm in need of a cash injection these dates. Coinbase raised $300 million in October in a round led by Tiger Global Management, and Kraken recently stated that it was position on shoring up the last stages of a $100 million round of funding.
While downturn investments are always risky, the crypto winter is also the fulfilled storm for some, allowing venture capitalists to swoop in and buy up major chunks of struggling crypto startups at cheaper valuations in the promises that they will skyrocket in value when the crypto market recovers.