Austin-based crypto-finance startup Unchained Capital has raised nearly $3 million in seed funding. Unchained’s first product is a crypto asset-backed loan, which is like borrowing against one’s home—except the company lends against digital assets such as bitcoin and ethereum.
Strategic investors include Michael Komaransky, formerly of Cumberland Mining; Brian Spaly, angel investor and co-founder of Bonobos and Trunk Club; Mike W. Erwin and William Hurley of Ecliptic Capital; and Ezra Galston of Starting Line, an early venture investor in the crypto sector. In addition to making investments in the seed round, Komaransky, Erwin, and Galston will join Unchained Capital’s board.
The round includes $2.4 million in new capital and $595,000 of SAFE notes converting.
The startup claims it was one of the first companies in the world to lend U.S. dollars in exchange for cryptocurrency. It operates by lending cash to long-term crypto holders who want to maintain ownership but don’t want to sell their coins. Unchained Capital privately made its first loan in June 2017 and launched publicly in November 2017.
“Crypto ‘whales’ want to diversify their holdings into real estate or other investment opportunities, and they’re willing to give up their Bitcoin in exchange for U.S. dollars for a fee,” said Kelly, who serves as the company’s CEO. “This allows them to keep their crypto and ride the upside while enjoying the ability to invest in other opportunities now.”
In addition to the funding, Unchained Capital is also announcing its expanding its crypto lending platform to accept ethereum (ETH) in addition to bitcoin.
Kelly said that accepting ETH as collateral has been a priority since the company was founded in 2016.
“Lots of customers have asked for it,” he said. “Unlike other crypto-lenders out there who utilize exchanges, third parties or single sig addresses for collateral storage, we wanted to make sure we offered the most secure storage solution possible before opening up lending publicly.”
The company’s vision is to build products that turn cryptocurrencies into the most useful assets in the world, Kelly added.
“Personal and business loan borrowers deposit Bitcoin or Ethereum as collateral, and we lend cash in return so that our borrowers can buy homes, deal with life expenses, and start or invest in businesses,” Kelly said.
He said the company is different from competitors in that it does not have “an unnecessary token.” Unchained is also the only crypto-lender with a California Finance Lender license, allowing it to serve California borrowers, according to Kelly.
In a written statement, Galston noted that while crypto assets are now a nearly $500 billion asset class, they are functionally “invisible” to the existing financial system.
“Holdings won’t enable consumers to obtain a mortgage, gain credit, or serve as collateral,” he said in a written statement. “Unchained is bridging that gap.”
Unchained Capital plans to use the new capital toward expanding its engineering and marketing staff and enhancing its financial services and wealth management offerings.