Allen Wagner April 14, 2014
Since bitcoin reached the venture industry’s radar in 2012, there have been 24 VC financings of U.S.-based bitcoin companies (as of 1Q 2014), with 14 last year and five alone in the first quarter of 2014. Unsurprisingly, the Bitcoin Opportunity Fund has made the most investments in the space (5), followed by Andreessen Horowitz, Ribbit Capital and Y Combinator.
Startups that provide payment tools and transaction platforms for bitcoin and other digital currencies have also been gaining traction with some traditional VCs. For example, Andreessen Horowitz and Union Square Ventures contributed to Coinbase’s recent $25 million Series B round, which valued the company at $143 million. And Accel Partners and General Catalyst joined the Bitcoin Opportunity Fund to invest $17 million in Circle Internet Financial.
There had been some discussion in the media that suggested investing in bitcoin companies would flat line following the bankruptcy of bitcoin-trading exchange Mt. Gox in February, but the event apparently didn’t have much of an effect, as several investors poured big money into five bitcoin companies in March. Marc Andreessen, co-founder and partner of Andreessen Horowitz, one of the bigger investors in the digital currency, said recently that one failure shouldn’t deter investors from a great opportunity. “I’m completely unfazed and plan to invest more,” he told The Wall Street Journal in March.
With more participation from mainstream VC firms, it’s possible we begin to see more bitcoin wallets, payment services and transaction platforms enter the mainstream, particularly as digital currencies see wider use in the years ahead. Whether bitcoin remains the digital currency of choice in the future is still unknown, but it’s clear that digital currencies have a place in our financial future.
Featured image courtesy of Wikimedia Commons user Zach Copley.