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Citadel-Backed Firm’s Bold $1 Billion Goal Suggestive of A Market Turning Point?

Last Updated April 18, 2024 4:55 PM
Giuseppe Ciccomascolo
Last Updated April 18, 2024 4:55 PM

Key Takeaways

  • Crypto startup investment has experienced a resurgence over the past several months.
  • Three new crypto and Web3 companies achieved unicorn status in March 2024.
  • The surge in crypto prices often precedes increased venture capital investment in crypto companies.

A startup prime brokerage, supported by Citadel Securities, has emerged as the latest  entity seeking fresh funds amid a resurgence in the digital asset market and in a period when investments in crypto startups increased compared to the end of 2023.

Such investments underscore a growing appetite for crypto companies, coming on the heels of a recent crypto frenzy that propelled Bitcoin to reach new all-time highs and contributed to significant increases in cryptocurrency prices.

Hidden Road Targets $1 Billion

Hidden Road Partners, specializing in cryptocurrencies and foreign exchange, is currently in the process of raising  a Series B equity round, aiming to elevate its valuation to approximately $1 billion. This round is anticipated to generate around $120 million in funding, according to two of the sources.

Established in 2018 by Marc Asch, formerly associated with hedge-fund billionaire Steven Cohen’s firms SAC Capital and Point72 Asset Management, Hidden Road completed a $50 million Series A funding round in 2022, spearheaded by Castle Island Ventures. Notable investors in the Series A round included Citadel Securities, FTX Ventures, Uncorrelated Ventures, Greycroft, XBTO Humla Ventures, Wintermute, Coinbase Ventures, and several others.

Hidden Road specializes in providing prime brokerage services across various markets, encompassing foreign exchange, precious metals, and digital assets. In light of the collapse of the FTX exchange, crypto prime brokers like Hidden Road and competitor FalconX have garnered increased attention, as they assume counterparty risk on behalf of clients. Their suite of services includes offering financing, which has witnessed heightened demand amidst the crypto market’s recovery from the credit crunch stemming from the collapse of several lending firms in 2022.

Both Hidden Road and FalconX were enlisted by Binance to implement more rigorous checks following its plea deal with US authorities, which entailed a payment of $4.3 billion in fines, as reported  by Bloomberg last month.

Hot Moment For Crypto Unicorns

In the lineup of 11 new companies to join The Crunchbase Unicorn Board  in March 2024, an unexpected sector emerged as the frontrunner: several companies operating in the cryptocurrency and Web3 domains achieved unicorn status last month. With this addition, the board, which catalogs private companies valued at $1 billion or more, now boasts over 100 current unicorns in this sector.

March also witnessed a notable milestone as the first company from Uzbekistan, Uzum, an e-commerce and payments platform, secured a spot on the board. Despite the achievement of unicorn status, many of these companies raised funding well below the $100 million mark, suggesting smaller ownership stakes compared to previous deals.

Of the new unicorns from March, four are based in the United States, with IntraBio relocating to the US following its latest funding round. Additionally, new unicorns hail from diverse corners of the globe including Czechoslovakia, the Cayman Islands, Singapore, China, India, and Australia.

Global new unicorn count
Global new unicorn count by month. l Source: CrunchBase

Berachain, an Ethereum-compatible blockchain for financial applications based in the Cayman Islands, secured $69 million in funding through the sale of digital tokens led by BH Digital and Framework Ventures, achieving a valuation of $1.5 billion.

Io.net, a blockchain service headquartered in New York facilitating the sale of excess GPUs, raised $30 million in a Series A funding round led by Hack VC. The company, just one-year-old, reached a token value of $1 billion following this funding.

Meanwhile, Singapore-based Web3 infrastructure provider, Polyhedra Network, closed a $20 million Series B round led by crypto investor Polychain. Despite being in operation for only a year, the company attained a valuation of $1 billion.

Impact On Crypto Prices

As investments flow toward crypto companies increase, speculation arises about their impact on crypto prices. However, when crypto prices surge, more venture capital firms tend to invest in crypto companies. Despite a decline in funding following events like Sam Bankman-Fried’s FTX debacle and the collapse of lending platforms, the crypto sector is now gaining attention for a different reason: Bitcoin’s surge to new all-time highs.

Bitcoin surpassed $72,000 in March, a significant jump from below $16,000 in late 2022. This rally, which started last year, has seen Bitcoin’s value soar by approximately 44% in March and about 179% in the last six months.

Venture capital firms funding to crypto startups
Venture capital firms funding to crypto startups. l Source: CrunchBase

While it’s early to assess the impact of this surge in venture investment, there’s been a noticeable increase  in funding for crypto startups over the past several months. In Q1 alone, venture funding for crypto startups exceeded $625 million across 111 deals, a significant uptick compared to the previous quarter’s $446.3 million across 108 deals.

March saw a surge in venture capitalists’ investments in crypto projects, with over $1.16 billion injected into the industry, driven by Bitcoin‘s new all-time high and the success of spot Bitcoin exchange-traded funds (ETFs). Most of this capital was directed towards projects focusing on crypto infrastructure and decentralized finance (DeFi), especially those on the Ethereum blockchain, along with investments in Polygon and BNB Chain.

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