Ad Home

GRID_STYLE
TRUE

Classic Header

{fbt_classic_header}

Ad

Breaking News:

latest

Cryptocurrency Attracts Big Players

Fundraising by cryptocurrency companies has seen a rapid rise in valuations as large investors push up prices, according to professional ser...

Fundraising by cryptocurrency companies has seen a rapid rise in valuations as large investors push up prices, according to professional services firm PwC. Boutique firms and family offices are being elbowed out by big venture-capital names, private equity players and even some pension funds, PwC Crypto Leader Henri Arslanian said in a phone interview Thursday. Smaller venture capital firms are unhappy, he added.

“Let’s say they’re looking at a deal and they believe it’s worth $10 million, and you’re seeing large VCs come in and put a bid in for a higher valuation,” he said. “This is happening a lot with very early-stage companies, say, $5 million to $20 million -- the prices are being inflated.”

Crypto deals have heated up in recent months after gains in digital currencies and as investors debate the future of the asset class. Crypto M&A was about $3 billion in 2020 and a similar amount was probably raised in the last two to three months alone, Arslanian said.

Bitcoin and Ether have risen strongly in the past year

In July, derivatives exchange FTX raised $900 million from Softbank Group Corp. and others, valuing it at $18 billion. Digital-asset platform Fireblocks took in $310 million to attain a value of $2 billion.

Challenges include how to discount for regulatory risk in such a new area and how to assess the valuation of businesses where many are only a few months or years old, Arslanian said. Another issue is lack of suitable assets to invest in, given many firms aren’t that big or well-developed yet.

“If your minimum ticket size is around $50 million, there aren’t that many companies that have that status yet,” he said. “If you’re a large pension fund and you decided to make a crypto allocation, there are no more than two dozen companies around the world that are investable, looking for capital and could absorb $100 million.”

No comments