FTX raises largest private equity raise in crypto industry of $900 million
FTX, the Antigua-based crypto exchange that is fast expanding into other areas of the crypto ecosystem, has announced a Series B fundraise of $900 million, which is by far the biggest ever private equity raise in the history of the crypto industry so far.
The list of investors in the current round is long, partly due to the number of funds involved and also because it is likely to have been a great race between investors to participate, and includes Paradigm, Sequoia Capital, Coinbase Ventures, and others. This fundraise now values the exchange at $18 billion and we had reported a few weeks ago that the company was looking to raise $1 billion at a valuation of $20 billion. It has to be noted that the company was valued at $1.2 billion just a year ago.
FTX was started pretty much late as far as the crypto ecosystem is concerned, much later than many of the other major exchanges like Coinbase, Gemini, and Binance but has rapidly grown over the last couple of years and it now boasts a userbase of over 1 million and an average daily volume of $10 billion. It offers a variety of advanced trading instruments and products like spot, margin, futures, options and covers a very large variety of instruments from the crypto industry and beyond as well and this has been one of the main reasons for it to have grown manifold in a short period of time.
“The primary goal of the raise was to [find] strategic allies who can help FTX grow its brand,” but the capital itself will be primarily used for acquisitions,” said Sam Bankman-Fried, the 29-year-old founder and CEO of the exchange.
It is also believed that the massive growth in userbase has been due to many of the sponsorships that it has been able to bag over the last year. It managed to tie up with the Miami Heat basketball team for the naming rights of its stadium while it had also signed a mega-deal with the esports company TSM and it has been strategically targeting sponsorships related to sports teams as it believes that traders and sports lovers have a lot in common. This seems to have been proved right so far and we are seeing other sponsorship deals being signed by sports teams with FX brokers and crypto exchanges as well.
With all the private equity raise seemingly going according to plan, the next target looks like a public raise via an IPO, like Coinbase, or some other similar vehicle. While some exchanges like Binance have so far avoided that route, Sam hinted to Forbes that he might be actively thinking about it in the short term but he does not have a specific timeline to do the same.