Despite cryptocurrencies continuing to stay well below the record highs they achieved early in the year, money is still pouring into the market in other ways. A Hong Kong-based crypto fintech firm, Amber Group, raised $100 million in a new round of funding. The latest haul brings the startup’s valuation to $1 billion.
The funding round was led by investment bank China Renaissance and New York-based investment firm Tiger Global Management. Coinbase’s investment arm, which was an existing investor, joined in on the action as well.
Amber Group is the latest crypto firm to attract serious venture capital.
Amber Group’s Series B funding round comes nearly two years after its Series A round. Then, Amber Group secured $28 million when Coinbase invested in the company.
Although the major cryptocurrencies have seen significant losses in recent weeks, more mainstream venture capital firms see Bitcoin and cryptocurrencies as viable investable assets. Hedging their bets by investing in crypto-adjacent companies like Amber Group, Coinbase, and other publicly traded crypto-businesses, investors can join in on the crypto action without holding any actual cryptocurrencies.
Data from PitchBook provided to CNBC reveals that venture capital investment into cryptocurrency and blockchain startups totaled $14 billion in the second quarter of 2021. That’s a remarkable jump from the $600 million in the same period last year.
Aside from venture capital firms investing in crypto-businesses, other notable companies have included Bitcoin in their asset holdings. For example, Tesla CEO Elon Musk has frequently made headlines about his bullish outlook on Bitcoin. He even eluded that Tesla itself holds Bitcoin. Musk made waves when it was revealed Tesla had sold 10 percent of its Bitcoin holdings. Musk said that he did it to prove its liquidity.
Amber Group isn’t just another crypto exchange.
Amber Group CEO Michael Wu said that the company is bringing a “private banking experience to everyday customers.” In the past, Amber Group usually sold products to institutional investors and wealthy individuals. Wu says that the company offers investors several different cryptocurrency products to invest in, including algorithmic trading and lending products.
Amber Group has been profitable since it was founded in 2018. In its announcement of the funding success, the company said it's on track to book revenue of $500 million by the end of this year.
According to Wu, 70 percent and 80 percent of the revenue comes from a net interest margin. Amber Group takes on customers’ deposits and offers an interest rate in return. The company then lends out the money from a pool of deposits to other entities at higher interest rates and makes money from the difference in rates.
The company has traditionally served more institutional investors. However, Wu said that Amber Group is making an effort to attract individual investing customers. “We don’t advocate heavy speculation or high use of leverage; rather, we want our customers to be more long term, focus on risk management and get stable and attractive yield,” Wu said.