Tagomi Systems, the startup that wants to bring its expertise in electronic trading to the bitcoin market, has gotten venture backing from Founders Fund, the venture capital fund owned by billionaire Peter Thiel.
The Wall Street Journal, citing people familiar with the situation, reported Founders Fund is part of a group of investors in the startup, which is aiming to place buy or sell orders of cryptocurrencies on behalf of wealthy people, reported The Wall Street Journal. One of the startup’s co-founders is Greg Tusar, who was head of electronic trading at Goldman Sachs. He is known in the electronic trading business and worked at Goldman Sachs from 2000 to 2013. He later worked at KCG Holdings, the trading company, which he left in July after it was acquired.
The paper noted that even with the backing of Thiel, it’s not a guarantee that the startup will be successful — especially given the steep decline in bitcoin this year. After moving higher for most of 2017, the value of bitcoin has plummeted around 50 percent since December. Not to mention that there are hundreds of startups in the cryptocurrency area, and Tagomi will have to stand out. There are also the risks associated with buying and selling big amounts of bitcoin. With a fragmented market, it could be hard to achieve its business on a large scale. As it stands, there are more than 100 crypto exchanges — and the exchanges usually have limits on how much a person can trade bitcoin each day. Tagomi is aiming to make it easier to make bulk trades, something that is possible with stocks.
While it isn’t clear how much Founders Fund invested in Tagomi, to date the startup has raised $15.5 million. It is still honing in on its strategy and may change the name of the company before it launches, reported the WSJ. Founders Fund is a backer of crypto startups, investing in hedge funds Metastable Capital and Polychain Capital, which are focused on the digital token market, and Harbor, which is a startup that is developing a platform for cryptocurrencies that represent real physical assets. The Founders Fund has more than $3 billion in assets under management and has invested in high profile tech companies such as Facebook and Airbnb.