Tightlipped Crypto Trading Giant Circle is Looking to Raise over $250 Million Per CEO Statements
The effects of a slowing economy are the fairest, they hit everyone equally. The downward trend that the crypto market experienced last year has been cruel in equal measures to all. This has caused some companies to face the stark realities of major restructuring or shutting down. Most have followed the former to stave off closing their doors. The latest in these trying times seems to be Circle who is attempting to garner support and raise $250 million.
This fundraising might not have been a big deal. Not so long ago the firm was valued at a whopping $3 billion. Till date, they have successfully raised nearly $250 million in various rounds, although more than $100 million was raised at the time of its last funding round. There is backing from financial heavyweights such as Goldman Sachs and Baidu. Yet, it must also be remembered that the companies valuation has steeply dropped, mirroring the fall of crypto prices. Furthermore, the amount is also not small, in fact, a successful fundraising round at this time would be a major departure from the current market trends in this climate.
If the company doesn't raise the amount, it is hard to establish what will come next. It has been widely speculated that the price correction is the main reason why an injection of funds is needed. However, Jeremy Allaire, CEO of Circle CEO did not directly respond to questions about the financial health of the company. He instead said that they were constantly seeking alternative sources of capital. Due to this opaqueness, there are too many questions hanging by the thread. Are the funds for expansion or are they to save a drowning ship? Are the target amounts realistic or is it just hoped that such an amount will be received by some miracle? There are so many questions that seem to be standing in an endless queue in the Bitcoin world.
It should be remembered that the crypto markets decided lack of empathy has seen many crypto related businesses, large and small, suffer staff layoffs. downsizing and closures. Recently some of the heavyweights in the industry made it to the news. Steemit, blogging, and social networking website had to let go of most of its staff. They are now working with about one forth their original size. ShapeShift, a crypto-to-crypto exchange and one of the pioneers started the new year by axing more than one-third of its staff.
These are far too common a trend in the bear market and with little information about the background of the money being raised, it is hard to say if the nearly 300 strong employee base of Circle needs to be concerned just yet.
While accepting emergency funds might not be a stage that the trading giants might be at, it should not be ruled out. To assuage community fears Allaire did note that even though the drop in valuation had hurt, Circles revenue had actually grown over the period between 2017 and 2018. After all the revenue generation is not directly dependent on prices but instead on trading fees and had handled over $24 billion in cryptocurrency trades in the last one year.
Circle is certainly not the first nor the last seeking a major fundraising round. The likes of Coinbase have had a recent successful round while Kraken is working on one themselves. This might be an ideal time for investors to buy up chunks when the valuation is low and then ride the money train when the Bitcoin market picks up again. For the moment one only hopes there is a bit of clarity in communication and that any portion of the 300 employees doesn't have to fast during Lent for any reason apart from religion.