A new unicorn in the Bitcoin industry is about to be born. After several days of rumors surrounding the cryptocurrency industry, the investigative company Chainalysis exclusively confirmed to Forbes that it expects to raise at a valuation of $1 billion as soon as next week. 100 million US dollars in venture capital. The Series C funding round led by the newly established venture capital firm Addition, led by Tiger Global alumni Lee Fixel, is expected to be participated by previous investors Accel, Benchmark and Ribbit.
Although Chainalysis CEO and co-founder Michael Gronager declined to disclose the company’s actual revenue, Forbes estimated its 2018 revenue to be $8 million, and Gronager said its revenue has increased by about 96% in the past year. Revenue is expected to double next year and 2022. This investment further proves that Bitcoin has more profitability than just buying at low prices and selling at high prices.
In addition to helping the US Department of Justice track down more than $1 billion worth of Bitcoin and other cryptocurrencies seized earlier this month, Chainalysis currently has 350 customers, including state governments and private institutions.
As Bitcoin recently reached its highest point of $18,600 in the past three years, Chainalysis and its code compliance concept is becoming a symbol of the obstacles investors must overcome to obtain the risk of alternative assets, and also a sign that these investors need to face. Gronager, 50, said: “We have proven that by providing data in an encrypted space, we can establish a world-class enterprise software service company and truly own encrypted data.”
The C-round financing signed by all transaction parties is waiting for the final written documents, and the total investment is 166 million U.S. dollars in combination with the B-round financing conducted 4 months ago. As part of the investment, the company currently has 200 employees and plans to nearly double its staff next year, including hiring international policy, sales and marketing, and research and development. Last July, Forbes named Chainalysis the first cryptocurrency company on its “Billion Dollar Startups” list. Co-founder Jonathan Levin is one of the members of Forbes Europe under 30.
Currently, the company has offices in New York, Singapore and Tokyo, and as Covid restrictions are expected to be lifted, the company plans to expand its international operations and the District of Columbia, where regulatory demand is at its peak in the United States. In fact, the demand has reached so great that in July, US President Trump’s former sanctions chief Sigal Mandelker joined Chainalysis’s advisory board as part of the Series B financing.
But most importantly, the company said it has raised much more funds than the Series B financing because it hopes to have the opportunity to acquire another company. Gronager said: “We believe that the timing, market and maturity of the cryptocurrency space will provide some integration, which may have some growth.
Chainalysis’s 250 customers are in the private sector, including payment giant Square and other companies, while the remaining 100 customers are from 30 jurisdictions in the public sector, including the IRS. In the past year, Chainalysis’s total customers increased by 65%. Gronager said that although the growth rate of most startups cannot reach 40% or more, Chainalysis’s current cash burn is “basically non-existent” and the company is expected to become profitable soon. “We want the company to burn very low and be extremely efficient,” Gronager said. “As a result, we are almost on the verge of profitability today.”
Of course, Chainalysis is a security company that helps identify cryptocurrency user fraud, XI money and other illegal and illegal activities. This is one of the first unicorns in the industry. This fact further proves why so many institutional investors still do not Willing to put my own funds into it. Although some high-profile companies, including JP Morgan and Citibank, have recently entered Bitcoin. Lead investor Lee Fixel described Chainalysis as “the future financial supervision platform for digital assets” in a statement.
Also today, Chainalysis published a report stating that 2020 is the year of Bitcoin adoption in institutions, with special mention of hedge fund managers Paul Tudor Jones and Square. Earlier this week, the well-known financial advisor DeVere Group stated that of the approximately 7 million millionaire customers who responded to the cryptocurrency survey, 73% said they have invested in cryptocurrency or will Investment in 2023 will increase by 68% compared to last year.
“As more and more mainstream companies (such as Paypal) start to provide encryption services,” Accel partner and investor of Chainalysis analysis firm Philippe Botteri said in a statement, “We expect greater acceleration in the future. “
More and more security companies, such as Chainalysis, Elliptic and the emerging Clain in Russia, are not only helping to identify crimes afterwards, but also helping to prevent crimes.
In August 2019, Chainalysis launched KYT to simplify blockchain analysis, and launched MarketIntel in July 2020 to analyze cryptocurrency exchanges and more. Together, these two services help Gronager’s so-called “code compliance”, making it easier to stop fraud and may help lay the foundation for more institutional adoption. “Today, the way to expand in the compliance department is not by adding ten people,” he said, “but it’s achieved by adding one more developer.”
