Digital Currency Group is selling shares in SoftBank and Alphabet’s venture capital arm in a deal that values the crypto conglomerate at more than $ 10 billion.
The Manhattan-based private company announced a second round on Monday in which existing investors will sell shares to new financiers. The $ 700 million deal was led by SoftBank and included Ribbit Capital and CapitalG, a subsidiary of Google’s parent company Alphabet, among others.
The Digital Currency Group is the parent company of several big names in the crypto space. So far, its valuation has been a mystery, given that only $ 25 million in primary capital has been raised since it was founded six years ago.
A subsidiary, Grayscale Investments, is the world’s largest digital asset manager with $ 50 billion in assets under management. Its flagship, Grayscale Bitcoin Trust, is the largest Bitcoin fund in the world and recently filed for conversion to an ETF. DCG, as it is also known, owns prime brokerage and institutional lending company Genesis, as well as CoinDesk news agency, and has supported more than 200 blockchain companies.
“We are the best representative for investing in this industry,” said Barry Silbert, founder and CEO of the Digital Currency Group, to CNBC in an interview. “We were looking for the kind of supporters who could and hopefully will accompany us on this journey over the next few decades.”
According to Silbert, CapitalG brings Alphabet and Google’s expertise to data and consumer businesses, while Softbank has the global footprint and ability to accelerate portfolio companies. The investment also signals renewed interest from venture capital firms seeking exposure to the digital asset class outside of Bitcoin.
CapitalG founder and general partner David Lawee said he sees this as an opportunity to support a potential winner in crypto financial services. Lawee invested in Lyft, Airbnb, Robinhood and Snapchat while at CapitalG, and prior to that he started an online gaming community that was acquired by Viacom. The crypto space is evolving faster than anything Lawee said in the dot-com era, which makes corporate adaptability even more important.
“When I think back to the nineties, there are very few companies that I’ve come to know – it’s very hard to evolve as fast as the technology advances – you have to be a pretty nimble company to benefit from it “Said Lawee. “DCG has a lot of flexibility to invest and get into new business.”
DCG also holds various digital assets, including Bitcoin. The world’s largest cryptocurrency hit an all-time high of over USD 66,000 in October and ended the month up more than 40%. Silbert is optimistic about the world’s largest cryptocurrency, which he described as unstoppable at the time. “But most of them are worthless, he said.
“Ninety-nine percent of the digital assets that exist today are overvalued, and most of them have no real reason to exist,” said Silbert. “But I also believe in creative destruction, and that’s fine, it won’t be valuable – what will come out of it are some incredibly valuable, powerful protocols.”
Today, DCG is one of the most valuable private companies in the industry alongside Ripple, Kraken and Circle. Silbert said he would not rule out an IPO, but it is “not in the plans and is not currently being discussed”. The company is profitable and, according to its CEO, is well on its way to reaching $ 1 billion in annual sales. Silbert also said he didn’t sell any shares in that second round.
“The typical reason companies go public or go public in a hurry is to improve liquidity or raise money for acquisitions, but we don’t have that pressure,” said Silbert. “I enjoy building this as a private company.”
