Bitcoin-based startup Digital Asset Holdings has had a hard time with closing deals with investors to cap off the company’s first round of funding, according to a report.
Former banker and now a prominent personality in the Fintech space Blythe Masters’ Digital Asset Holdings is ‘struggling’ to close its Series A round of funding by investors.
The New York Times reports that former JPMorgan employee and now CEO of Digital Asset, Blythe Masters has already been promised an investment of $7.5 million from her former employer. JPMorgan is also seen as the lead investor in Digital Asset Holdings, with the funding.
However, the prominent publication cites sources briefed on the deal that banks such as Citigroup and Goldman Sachs are hesitant with pouring money into the startup. The reason, according to the report, is the banks “learning that JPMorgan was being given better terms than the other investors.”
Even more significantly, NYT sources claim that the banks and other financial firms that are seen are investors have doubts over the actual software solutions that are developed by Digital Asset.
The report cites a recent demonstration of a software solution developed by Masters’ firm to investors. The solution reportedly allows for the quick trading of syndicated loans, large loans that are broken down to several chunks before being sold to different investors. Current systems see this process taking weeks, a time span that Digital Asset is looking to shorten. However, investors who were able to see the software at play remain unconvinced about its impact in space of loan banking where human interaction and cooperation is seen as a pitfall, just as much as ineffective software.
With negotiations still on the table, an anonymous executive from one financial firm looking to invest told the publication:
The deal would need to improve materially for us to get involved. It’s not supercompelling.
Now firmly in the (private) distributed ledger realm, Digital Asset has been acquiring other blockchain-solutions startups this year. The most recent acquisition was that of Blockstack, a San Francisco-based startup that offers a toolkit to develop APIs and SDKs on a private blockchain.
Meanwhile, JPMorgan is seen to be rewarded by Digital Asset for its commitment to lead the Series A investment round, according to the newspaper’s sources. Digital Asset is reportedly granting the banking giant the means to buy a bigger share of the startup in the future, for the same investment money poured in now. This move is allegedly putting off other banks looking to be investors. Concerns are said to be raised about the JPMorgan deal among representatives of Bank of America, Citi and Goldman Sachs. Smaller financial firms such as Nasdaq and Markit are also said to remain hesitant.
Masters is looking to raise between $35 to $45 million for the company’s investment round, figures that would value Digital Asset Holdings at $100 million.
Digital Asset Holdings’s marketing head Beth Shah has denied the report’s assertions that the company is struggling to close its round of funding.
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Last modified: June 10, 2020 1:20 PM UTC