Series A Funding Round Ends for Bakkt, Resulting in Over $700 Million Valuation
The Intercontinental Exchange has yet to launch their new Bakkt platform. However, it was just a part of a Series A funding round. In reports from The Block, it appears that the new valuation of the company is $740 million.
Last year, as the company pitched their new futures trading platform that appealed to institutional investors, it managed to accumulate $182.5 million in funding.
Considering the current estimated valuation at $740 million, it would be safe to assume that up to 25% of the shares were sold to some of the external investors, like Microsoft, Starbucks, Galaxy, and Pantera. Starbucks allegedly has contributed no collateral.
A company’s value after adding outside financing and capital injections to a balance sheet is called the “post-money valuation.” In this circumstance, that amount includes the equity that Starbucks received as a result of their partnership.
The consideration now will be the way that investors will be able to get their projected returns on this substantial valuation, with the regulatory issues and five-month delay in their way. Some people believe that charging a 50-cent fee for each contract is miniscule, potentially being worth less than 1 basis point.
The next cheapest option for trading in the US amounts to 8 basis points. One source told The Block that it does not look like Bakkt will have much to earn with the fees, leaving them to rely on volume for revenue.
This source added that the way that the company runs after launching will need to be basically flawless to ensure that its spending doesn’t fluctuate. These numbers will need to be the highest in recruitment, though the source added that there will need to be a lot of plans falling in line perfectly to get the returns that this Series A funding round has set them up to expect. It shall be an interesting time in the bitcoin space when all of this materializes.
If Bakkt finds themselves unable to deliver on their plan for institutional adoption, and cannot create new sources of cash flow, they will have equity redemption rights through ICE.
The platform had noted this benefit in their SEC filing on Page 60, which says that the “non-ICE partners” have an option that require the platform to “repurchase their interests” if they are unable to perform as projected.
Now, Bakkt could realistically push the value of the company to $1 billion during the next fundraising round. Then, to prevent any further dilution, the company could potentially sell multiple other preferred shares at a comparable price, raising capital without losing tons of equity in the process.
One investor commented that they would rather look at cheaper alternatives in US digital asset derivatives, which are preferably “further ahead in execution.” At this point, Bakkt has declined to make any comments.