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Digital Currency Group, the parent company of the largest digital asset manager Grayscale Investments, raised $700 million at a valuation of more than $10 billion. The company announced a secondary round on Monday, in which existing investors sold shares to new backers. This was an opportunity for some early investors to take profits and exit. But no one sold their entire stake, said DCG. After FTX’s $900 million at an $18 billion valuation, the second-largest funding round in the cryptocurrency market was led by SoftBank and counted Google’s venture capital arm Capital G, Ribbit Capital, Vision Fund 2, Latin America Fund, and GIC Capital among its investors. Founded in 2015, the company previously raised $25 million in primary capital. Besides Grayscale, which has $50 bln under management, DCG also owns prime brokerage and institutional lending firm Genesis, data firm TradeBlock, mining company Foundry, news outlet CoinDesk, and has backed over 200 blockchain companies. “We’re the best proxy for investing in this industry,” said Barry Sibert, founder, and CEO of Digital Currency Group, in an interview.
“We were looking for the type of backers that could be, and hopefully will be with, with us on this journey for the next couple of decades.”
Diversity Of Exposure To Crypto
While Softbank brings with itself the ability to turbo-charge portfolio companies, Capital G brings in Google’s expertise in data and consumer companies, said, Silbert. It was only about three months back that Softbank started investing in the crypto sector. “We hadn’t made any investments in crypto because we didn’t think it was ready,” said Marcelo Claure, chief executive of SoftBank Group International.
“It is basically the single-best asset that gives us the diversity of exposure to crypto, A-Z.”
To Capital G, which has invested in Robinhood, Airbnb, Snapchat, and Lyft, this $100 million investment in DCG is a way to back a potential winner in crypto-financial services. [blockquote_with_author name="David Lawee" position="Capital G Founder & General Partner "] “When I think back to the nineties, very few companies I met still exist -- it’s very hard to evolve as quickly as technology evolves -- you need to be a pretty nimble company to take advantage of it.” “DCG has a lot of flexibility to make investments and to get into new businesses.” [/blockquote_with_author]
Believer In Creative Destruction
While DCG wouldn’t rule out an IPO, it is “not in the plans and not being discussed right now,” given that already, the company is on track to top $1 billion in revenue for the year, said Silbert, who did not sell shares in this second round. He owns slightly less than 40% of the company. Additionally, the company holds various crypto assets, including Bitcoin, which according to the CEO, is “unstoppable at this point.” To Silbert, it wasn’t until this year that he fully expected crypto to have a viable future. Bitcoin’s rebound from 2020 lows and growing acceptance among investors gave him confidence in its future.
“Prior to that, I’d still wake up not sure if bitcoin was going to be around the next day.”
But 99% of digital assets currently existing are also “overvalued” and have no reason to exist.
“But I’m also a believer in creative destruction and that’s okay that they aren’t going to be valuable -- what’s going to come out of it is some incredibly valuable, impactful protocols.”