Goldman, IDG Capital Led $50M Investment in Boston Startup Boosts Bitcoin Outlook

The news that Goldman Sachs and China’s IDG Capital Partners co-led a $50 million investment round pumped into bitcoin startup Circle Internet has sent cheers of jubilation reverberating through the cryptocurrency community.

The investment values the Boston startup at $200 million and added to the $23 million it had raised from Breyer Capital, General Catalyst Partners, Accel Partners, Digital Currency Group, and other investors.

Co-founder Jeremy Allaire blogged about the new investors:

Goldman Sachs and China-based IDG Capital Partners were joined by all of Circle’s existing investors in the round, including Breyer Capital, General Catalyst Partners, Accel Partners, Oak Investment Partners, Fenway Summer, Digital Currency Group, Pantera Capital, and strategic individuals.

We could not be happier with our new strategic investors. They bring unique, powerful capabilities and capital that will help us continue building a new kind of global consumer finance company, one based on open platforms, open source software, and ubiquitous mobile devices.

Tom Jessop is a Managing Director in Goldman Sachs’ Principal Strategic Investments Group. That group focuses on strategic investments and related business development initiatives within the financial technology space. Commenting on the investment, Jessop explains:

As the financial services industry continues to become more digital and open, we see significant opportunities in companies and solutions that have the promise to transform global markets through technical innovation. We think that Circle’s product vision and exceptional management team present a compelling opportunity in the digital payments space.

IDG Capital Partners likewise brings a strategic capability to Circle with its strong track record of investing in innovated companies in China, including Tencent, Baidu, Ctrip, CreditEase, and Xiaomi, and a longer history in helping Western companies navigate and bring products and services to the China market.

Quan Zhou, Managing Director of IDG Capital Partners and Circle board member, explains:

Consumer finance is undergoing a profound transformation with the rise of mobile payment applications and a growing appetite for financial products from non-traditional providers. We feel that Circle is strongly positioned to capitalize on these trends. We are very excited about our investment and look forward to helping launch the company in the Chinese market where consumer adoption of innovative digital payment products is growing at a tremendous rate.

China is today the center of innovation in mobile apps and digital finance. We have a lot to learn from them, and we’re excited to bridge the dollar economy to the yuan economy using global digital currency. This will take time, as companies and services like Circle’s must address a complex and evolving legal and regulatory
landscape in China.

The sizeable investment in Circle comes after price of bitcoin dropped significantly over the last year to the $230 range, despite over $350 million in venture capital being invested in bitcoin ecosystem.

The news of the investment gives a boost to the confidence in the Bitcoin sector as a whole, according to some analysts. There are also rumblings that more investments in cryptocurrency and Blockchain technology will be revealed in the coming months.

In 1995, Allaire co-founded Allaire Corporation with his brother J.J. Allaire. The software company created ColdFusion, the first commercial web application server platform. Allaire Corporation launched a successful IPO in January 1999 and was acquired by competitor Macromedia, the maker of Flash and Dreamweaver software, in 2001 for $360 million.

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