Crypto may be in the doldrums, but that doesn’t mean that investment in the market has stopped.
Top Silicon Valley venture firm Accel earlier this week led a $30 million Series B funding round for Chainalysis, which offers software tracking crypto transactions.
Accel partner Philippe Botteri explained the rationale behind this investment.
“Someone said it’s a crypto winter, [but] that is not the way we’re looking at it,” Botteri said in an interview. “What we are looking at is the purpose of cryptocurrencies, which is to reduce friction around transactions in a decentralized approach. And this could bring about a lot of benefits for the economies. We think that is a movement that is going to stay.”
The crypto market has been through a prolonged slump in the last several months. Bitcoin, the largest cryptocurrency by market cap, has fallen about 80% from its all-time high set in December 2017 and the wider crypto market has lost $700 billion over the last year. But Botteri thinks the crypto market is still at its nascent stages, so huge volatility is to be expected.
Going forward, Botteri said the crypto space needs tools that will enable and safeguard growth in the system.
“If you want the crypto ecosystem to thrive, you need to bring more transparency and trust,” he said. “So we looked at the market and found what are the companies working on this issue.”
As large banks start to dip their toes into bitcoin, they’re looking for infrastructure and safety mechanisms found in traditional equities markets.
“I think if we look forward and see the future of ecosystem, the next level is going to be the adoption of cryptocurrencies by large financial institutions.” Botteri said. “There are early signs that large banks are interested in custody offerings, and big asset managers are working on crypto offerings. There are needs for compliance and security. So we are looking at the companies providing security structure for the financial institutions to afford the offering.”
A 12-year veteran in the venture capital space, Botteri has spearheaded a number of big deals including DocuSign, the electronic signature company that went public in 2018 and now has a market cap of $8.7 billion. He also backed French ridesharing startup BlaBlaCar, a European unicorn valued at $1.6 billion after a 2015 funding round.
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