Bitpay, the blockchain payment startup has announced to have raised $40 million in a Series B funding round. The round was participated in by leading venture capital firms like Menlo Ventures and ATG (Aquiline Technology Growth).
Bitpay, which processes bitcoin and bitcoin cash payments for the merchants, had announced last year to raise $30 million. However, the company had to expand the round before concluding, as it saw higher than expected demand, and ultimately raised $40 million.
The investment announced (by Menlo Ventures) comes as part of the Series B funding round and is the largest investment in the company’s 7-year history. The announcement is more noteworthy as it is the first time that Menlo has acquired a stake in a cryptocurrency startup.
Menlo is one of the Silicon Valley’s oldest venture capital firms, and their announcement to dip its toe into the blockchain ecosystem marks a significant move. Founded in 1976, Menlo was one of the first Valley-based VCs to be on the back of leading tech startups like Uber and Tumblr. However, it has avoided the cryptocurrency and blockchain markets till now.
What makes this funding so important?
While there are a number of reasons why this is a significant development, the following points may help in understanding the context better.
- It is the first time since 2014 that Bitpay has gone to raise funding. Last time, it raised $30 million in a round that included Virgin Group founder Richard Branson and others.
- Bitpay aims to use the finding amount to expand its operations in Asia, hire more engineers, and acquire some technology licenses.
- Menlo’s participation is another significant move which sends a positive signal to the market about the future of blockchain. The firm anticipates that the blockchain will become an integral part of the future payment technologies, though it is yet to purchase any cryptocurrency or participate in an initial coin offering (ICO).
- Tyler Sosin (who heads Menlo's crypto initiatives) told Recode that the firm has been considering investments in various blockchain startups for the past 18 months, but was dissatisfied with its options until it found Bitpay.
- While there is no mention of the exact amount Menlo invested, the firm seems to be taking a keen interest in the crypto and blockchain market. Tyler Sosin indicated this round as the start, hinting at the firm investing more in the market.
Bitpay is Atlanta based bitcoin payment service provider and was founded by Tony Gallippi and Stephen Pair in 2011. The startup provides Bitcoin and Bitcoin Cash payment processing services for merchants and is one of the largest bitcoin payment processors. It raised over $30 million funding in 2014 and started processing close to $1 million a day. So far, it claims to have processed nearly $2 billion in annualized payment.
Since 2014, the startup has developed a number of partnerships with merchants like Microsoft, Warner Bros, and payment systems like PayPal. They have introduced a number of tools and open-source bitcoin projects like BitCore and Copay.
In March 2018, Bitpay announced full support of Bitcoin Cash starting with the Bitpay Card. Now, this is integrated as one of the primary payment gateway options. As a result, the merchants have the option to accept blockchain payments (globally) on a wider scale, and there is almost no risk of credit card frauds.