By Tiger Global is a United Kingdom hedge fund that predominantly invests in global consumer brands. They are reportedly deliberating a $500 million investment into Coinbase. Sources who have spoken to Recode, a tech news outlet, reported that the cash injection would boost the start-up’s valuation to close to $8 billion, as well as strengthen the cryptocurrency market’s legitimacy. Should the investment of Tiger Global be authorised, Coinbase would be considered to be one of the highest valued U.S. start-ups.
As the leading marketplace for crypto trading, Coinbase can make money on every transaction. It is anticipated that Coinbase will contribute $250 million into their coffers and as much as $250m more could go into buying out existing investors.
COINBASE FAILING TO SECURE A SECONDARY STOCK SALE
Last summer, Coinbase was valued at close to $1.5 billion. However, the valuation came right before a spike in consumer interest in cryptocurrencies at the end of 2017. Since then, the company’s value has declined, due to the parallel decrease in cryptocurrency prices. Brian Armstrong, Coinbase’s Chief Executive Officer (CEO) and other observers have been quick to point out that they do not focus on short-term trading volume, but rather for opening up the financial system for the world.
Coinbase claims it is profitable and, per the report, has been negotiating with investors for most of the year concerning a secondary stock sale. The investment in part would buy out existing shareholders, although the specific numbers have not been determined. Coinbase wanted to enable a secondary stock sale, which would permit existing investors to cash out without the company having to raise its funds. However, at present, the subsequent sale negotiations were deemed unsuccessful.
Coinbase has previously cautioned people to stop soliciting shareholders, and an agreement was never reached. When questioned further, the company declined to answer Recode’s questions on the matter.
POSSIBLE IPO ON THE CARDS
Coinbase allegedly attempted to value itself at $8 billion in its acquisition of Earn.com earlier this year. This is the largest that it has been to date, and it has also been said that Coinbase may even have been scaling for a possible IPO. It should be noted that Recode had stated that when Coinbase acquired Earn.com in September, the offer included an equity package that tacitly valued the exchange operator at $8 billion.
It has been reported that Coinbase was attained an excess of $1 billion in revenue for 2017. This drove Bitcoin prices to nearly $20 000.
Over the summer, David Marcus from Facebook was lost as an independent director. However, the cryptocurrency industry giant, who was recently named the Chris Dodd of Charles Schwab, has been welcomed to its board. Also, Michael Li, a senior executive and head of analytics and data science at LinkedIn, was recently hired as the company’s new vice president of data.
It has been reported that Facebook has been focused on expanding its blockchain division whereby one post said that what the company aims to attempt “is a start-up within Facebook, with a vision to make blockchain technology work at Facebook scale and improve the lives of billions of people around the world.”
What do you think about Coinbase’s valuation? Why do you think that Coinbase declined to comment on Recode’s questions? Let us know in the comments section below!
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