Hong Kong's FTX raises $420m, hits $25b valuation
Hong Kong cryptocurrency exchange operator FTX has raised $420 million at a valuation of $25 billion from a group of 69 investors.
The investors include Sequoia Capital, Lightspeed Venture Partners, Tiger Global Management, Ribbit Capital, Sea Capital, Institutional Venture Partners (IVP), Iconiq Growth, BlackRock, Temasek Holdings, and an innovation platform of Ontario Teachers’ Pension Plan Board.
The investment is considered an extension of a $1 billion Series B round raised in July from more than 60 investors at a valuation of $18 billion. Sequoia, Lightspeed, Temasek, Ribbit, Thoma Bravo, Altimeter, Bond, Insight Partners, NEA, and SoftBank were among the participants. Crypto specialist Paradigm, Coinbase Ventures, Sino Global Capital, and Multicoin were also involved.
It demonstrates both the increasing appetite for global generalist investors for blockchain-related companies as well as a boom within the crypto exchange segment. Global VC investment in blockchain companies averaged $1.1 billion per quarter throughout 2019 and 2020 before spiking to $6.5 billion and $5.4 billion in the first and second quarters of 2021, according to GlobalData.
Meanwhile, crypto exchanges have emerged as one of the best-funded business models despite significant regulatory uncertainty.
Regional exchanges raising VC funding in the past two months alone include Singapore’s Cobo, Thailand’s Zipmex, Indonesia’s Pintu, and various players in India, where momentum is supported by a recent Supreme Court decision. In August, CoinDCX became India’s first crypto unicorn following a $90 million round. Coinswitch Kuber then raised a $260 million round, claiming to be the largest app of its kind in the country.
FTX also signals the emergence of Hong Kong as a crypto hotspot. This week, Animoca Brands, which focuses on non-fungible tokens (NFTs), raised $65 million at a pre-money valuation of $2.2 billion. Earlier this year, Amber Group and Babel Finance secured $100 million and $40 million, respectively. Other major players in the territory include BitMex, which has been reportedly valued as high as $10 billion. BitMex has made VC investments of its own in at least three exchanges.
FTX is one of the largest crypto exchanges globally with over one million individual and institutional users as of the Series B in July. The company claims to have grown its user base by 48% since then, while also growing its average daily trading volume by 75% to $14 billion. It recently acquired US-regulated crypto exchange and clearinghouse LedgerX and launched a global NFT marketplace.
“FTX has that rare combination of a visionary founder, impeccable execution, and an exploding market,” Tom Loverro, general partner at IVP, said in a statement. “They also take regulatory compliance and engagement seriously. Our thesis has been and continues to be that only the trusted, regulated exchanges will win in the long run. Ambition, creativity, velocity, and rigor make FTX truly unique.”
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