Crypto Firms Engage in Aggressive Fundraising to Boost Valuations

Cryptocurrency startups are reportedly engaging in aggressive fundraising as the digital asset space recovers.

As Bloomberg News reported Saturday (May 4), this approach entails an open-ended form of fundraising that keeps money flowing and fast-tracks valuations. It’s the opposite of the standard venture capital strategy of low-key rounds spaced out over years.

“When a deal is very oversubscribed, it’s becoming more common to see this type of structure,” said Michael Heinrich, co-founder of 0G Labs, a blockchain startup focused on decentralized artificial intelligence (AI). “Investors are still willing to pay higher prices because it is seen as a signal of market success, even if in rapid succession.”

Crypto companies had an uphill battle to gain funding last year, following the 2022 “crypto winter,” marked by a market downturn on several high-profile criminal cases.

Since then, digital asset prices have seen a resurgence, with the value of bitcoin — the most popular crypto — more than doubling in the last year. The Bloomberg report argued that while a sell-off in tokens last month showcases the crypto sector’s volatility, the overall market is in a better place than in the recent past.

Against this backdrop, companies are reembracing the idea of crypto payments, as noted here in separate reports in the last two weeks. For example, Coinbase — the largest crypto exchange in the U.S. — said that payments have emerged as a key opportunity area.

“[We’re] driving utility in crypto,” CEO Brian Armstrong said on a recent earnings call. “We’re doing this through Base, our low-cost Layer 2 solution, and building a better payments experience on crypto rails.”

“Base has helped dramatically reduce transaction fees and confirmation times, getting us closer to our goal of having the average crypto transaction take less than one second and cost less than $0.01 anywhere in the world,” he added.

And in late April, Stripe announced it was reentering the cryptocurrency payment space following a six-year hiatus.

“Crypto is back,” John Collison, the company’s president and co-founder, said at a company keynote entitled “The Future of Payments.”

“We’re excited to announce that we’re bringing back crypto as a way to accept payments, but this time with a much better experience,” he said.

Collison went on to say Stripe will begin supporting global stablecoin payments this summer, with transactions that instantly settle on-chain and convert automatically to fiat.