BitGo Raises $42.5M, Without An ICO, For Crypto Security

Morning Report: You can still raise money for your crypto firm without an ICO.

In the midst of unprecedented price variance, institutional pickup, and general chaos, it’s a fine time to be up to your knees in crypto. And as the crypto world grows, so too does the need for better security inside the next-gen finance niche.

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That’s BitGo’s hope, at least. The firm announced a $42.5 million raise today, far outstripping its prior funding total of $12 million, picking up cash from Valor Equity Partners and others (including David Sacks of Yammer fame).

The funding caught our eye for two reasons.

First, BitGo didn’t raise its funds in the form of an ICO. Given the momentum behind this fundraising mechanism, and how formulaic they seem, you could imagine the press release:

BitGo announces the completion of its $8.08 trillion ICO today, selling 9.1 quad-billion “BG” tokens. BG tokens will be accepted at a later date for access to BitGo-sourced enterprise-grade security. The ERC20 tokens will also trade publicly….

You can vomit now.

But the company didn’t do that. Instead, it did what most companies do: trade equity for cash, using the latter to fuel the growth in the value of the former.

Finally, Bitgo’s raise is notable because the company is a “picks and shovels” business. In financial circles, that phrase, and a host of similar constructions, denote a business that equips and enables the workers of any particular hype cycle. The origin of the phrase came from San Francisco, a long time ago, when stores sold picks and shovels to hopeful miners who went out looking for gold. The joke went that you could make more money selling gear to the true-believing zealots than you could make by actually prospecting for gold.

Enter BitGo, which, according to its own verbiage, “empowers businesses to integrate digital currencies into their existing financial systems securely and at scale without ever taking custody of the asset.” Grok the gist?

So the new capital represents an infusion of money from traditional sources into a company that wants to power the traditional adoption of a non-traditional technology.

The firm claims that it “processes over $8 billion [in] transactions per month.” That scale, which has presumably spiked in recent weeks as bitcoin has returned near the Sun thanks to its cyclically-Prometheum orbit, must have helped it raise the new cash.

Up next we’ll find out which of bitcoin’s biggest hits is playing next: Big Crash or To The Moon.

From The Crunchbase Daily:

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Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.

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