Hedge fund Tiger Global is reportedly eyeing a $500 million investment into San Francisco-based Coinbase, which could see the company reaching an $8 billion valuation, Recode reported on October 2.
A Transaction That Would Make Coinbase One of the Highest-Valued Startups in the U.S.
(Source: The Wall Street Journal)
Tiger Global, a U.K. hedge fund that invests mainly in global consumer brands, is reportedly considering a $500 million investment in Coinbase. The transaction would make the San Francisco-based Coinbase one of the highest highest-valued startups in the U.S. and help further legitimize the entire cryptocurrency industry.
According to an October 2 report from Recode, Coinbase is currently negotiating a deal with Tiger Global and its current shareholders that would secure an investment of up to $500 million. People familiar with the matter have reportedly told Recode that Coinbase is expected to add about $250 million in new money to its own coffers.
Sources added that as much as $250 million more could go to buying out existing investors, though the exact amount has yet to been determined. However, Coinbase is yet to issue an official comment on the deal, leaving most of the public in the dark about the details of the deal.
Galaxy Digital CEO Michael Novogratz told CNBC the news about the reported negotiations proved that cryptocurrencies like bitcoin were more than just “tulip mania.”
According to Recode, some of the money will be used to buy out existing shareholders, while most of it will be used to invest in the company. TechCrunch also indicated that Coinbase is talking to investors about a secondary stock sale that could allow existing investors to cash out from the company without having to warn deal-makers and shareholders.
In fact, the inbound interest for the secondary sale was so high at one point that the company issued a stern warning to dealmakers to back off from the company and its shareholders.
A Good Year for Tiger Global Management
While the $500 million investment might seem like an incredibly high amount of funding for a crypto startup, it pales in comparison with Tiger Global’s other investments.
The massive New York-based investment firm gravitates toward these big deals in consumer-facing brands across the world, with Coinbase being their first venture into the world of cryptocurrencies. The 16-year-old hedge fund has already invested huge amounts of money in late-stage companies such as Spotify, Ola, and Flipkart, TechCrunch reported but doesn’t shy away from smaller investments either.
According to PitchBook, Tiger Global has participated in 24 venture capital rounds so far in 2018, leading cannabis startup Green Bits’ $17 million Series A and participating in subscription billing and payment service Chargebee’s $18 million Series C.