Blockstream, a bitcoin-based blockchain startup, has secured what's believed to be one of the biggest funding rounds of its type in the digital currency space.
The company announced yesterday (Feb. 3) that it has raised $55 million in Series A funding in order to bring what it calls its "next-generation blockchain innovation" to market using its sidechain technology. It also plans to use the new funding to expand globally and support its industry partners.
Included in this funding round, which follows Blockstream's $21 million seed round in 2014, are Horizons Ventures, AXA Strategic Ventures and Digital Garage, with participation from existing investors, including AME Cloud Ventures, Blockchain Capital, Future\Perfect Ventures, Khosla Ventures, Mosaic Ventures and Seven Seas Venture Partners. Horizons has also joined its board of directors.
"Blockchain technology is redefining what is possible within the FinTech ecosystem and beyond," said Frances Kang from Horizons Ventures. "The transition to this new world — one that is decentralized, interoperable, secure and trustworthy — is going to be illuminating. We are excited to be working with Blockstream to see their innovative sidechain technology reach its full potential."
Sidechains, a blockchain protocol and platform, enables cross-chain functionality by extending bitcoin's reach to support both public and private blockchains. According to Blockstream: "This approach leverages the most mature and well-tested technology," noting that there is $1 billion invested in companies working with this code today in order to cut its costs, improve security standards and reduce network fragmentation.
"We are convinced that blockchain technology has the ability to transform not only financial services but also other industries," said François Robinet, managing partner at AXA Strategic Ventures. "Blockstream has the best technical team in the industry, and we strongly believe in their approach of developing foundational infrastructure for various blockchain applications. We value Blockstream's open source approach and its sidechain technology, which will allow interoperability between different chains and provide critical long-term success in this sector. We also look forward to partnering with Blockstream to drive the transformation of insurance and asset management businesses."
This major funding round in the blockchain ecosystem follows the $52 million that was raised by former JPMorgan executive Blythe Masters' Digital Asset Holdings last month. That round included backing from Citi, Deutsche Börse, Santander InnoVentures, ABN Amro, BNP Paribas, JPMorgan Chase and PNC Financial Services Group; exchange operator fund CME Ventures; tech firms Accenture and Broadridge; and ICAP and Depository Trust & Clearing Corporation (DTCC).
Since announcing its initial round, Masters' company said it has garnered another $8 million for its round, adding Goldman Sachs and IBM to its list of investors.
Clearly, despite the negative rhetoric surrounding bitcoin and its blockchain tech, the interest in distributed ledger tech isn't going away anytime soon.