Coinbase, the number 1 cryptocurrency company in the world, has just announced that it has raised $300 million in series E funding led by Tiger Global Management. This brings the company’s valuation to $8 billion. The round also included participation from Y Combinator Continuity, Wellington Management, Andreessen Horowitz, Polychain, and others. This $300 million investment values Coinbase at more than $8 billion, a figure that surpasses other so-called “unicorns” like Dropbox, Airbnb, and Uber, which have all reached valuations above $7 billion.
In 2013, Adam White, the former chief operating officer of the largest cryptocurrency exchange Coinbase, convinced venture capital firm Andreessen Horowitz to invest $2.5 million in Coinbase. At the time, Coinbase was a three-person startup with Coinbase CEO Brian Armstrong as its only full-time employee. Today, a $4.6 billion market cap makes Coinbase one of the most valuable cryptocurrency startups in the world. (If we were to exclude all of the Ethereum ICO money that flows through its service, the market cap would be even larger.)
Eight years ago, Fred Wilson, co-founder of New York-based venture capital firm Union Square Ventures, invested $2.5 million in the then-unknown cryptocurrency exchange Coinbase, which recently became the company’s most profitable exit, Bloomberg reported yesterday.
We could be dead wrong, it could be a utopia, Wilson said shortly after investing $2.5 million in Coinbase in 2013. It’s straight out of a science fiction novel, but science fiction novels are the best thing to read if you want to invest. It’s an intuitive guess.
Eight years ago, he thought cryptocurrencies were science fiction, but his assumption has since earned him $4.6 billion. https://t.co/7szwUaTzXc
– Bloomberg (@business) April 30, 2021
As reported, Coinbase, the largest cryptocurrency exchange in the United States, went bankrupt on the 14th. April live on the Nasdaq stock market. The listing was one of the most anticipated events in the cryptocurrency space, bringing the valuation of the platform to approximately $86 billion.
Meanwhile, Union Square’s $2.5 stake in the exchange reached as much as $4.6 billion on the first day of trading, and the venture capital firm sold 4.7 million of its shares to Coinbase for $1.8 billion.
Wilson says one of the hardest aspects of managing a venture capital portfolio is managing the big winners, and he’s had a few of those in his career. In addition to Coinbase, Union Square has also invested in successful platforms such as Twitter (valued at $24 billion in 2013), Zynga Inc. (IPO of $7 billion in 2011) and Tumblr (acquired by Yahoo in 2013 for $1.1 billion).
Fred Wilson’s winners. Image: Bloomberg
Fred is driven by intellectual curiosity. He didn’t get into this business for the money, Zynga founder Mark Pincus said at the time. Remarkably, Wilson declined to be interviewed for the Bloomberg article because he believes that investors should not be central when entrepreneurs and management are creating all the value.
Union Square’s $20 million bet on Twitter pays off as IPO approaches | http://t.co/mZikd7t2Bo
– Bloomberg (@business) October 7, 2013
According to the report, Union Square’s investment philosophy focuses on companies that increase access to knowledge, capital and wealth and have strong working communities.
Coinbase is at the center of this process. Most venture capital firms deviate from their investment thesis. Union Square is very disciplined. They are very good at taking a trend and breaking it down into its constituent parts, says Angela Lee, director of innovation at Columbia Business School.
And so far, this discipline seems to be paying off.
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