Crypto platform FalconX doubles valuation to $8 bn despite downturn

FalconX, a digital asset trading platform and brokerage for institutional investors, has doubled its valuation to $8 billion, despite a major market downturn for crypto. 
 

The San Mateo, California-based startup said Wednesday that it had raised $150 million in a Series D funding from investors led by GIC and B Capital, a previous investor. Thoma Bravo, Adams Street Partners and previous investors Wellington Management and Tiger Global Management also participated. FalconX previously raised $210 million at a $3.75 billion valuation in August. 

The company’s new funding arrives as a crypto winter chills the digital asset industry. Companies like Coinbase Global Inc., Gemini Trust Co. and Crypto.com have laid off staff. The price of Bitcoin has sunk about 30% over the past month.

Venture capitalists have also pulled back from crypto, despite being some of the industry’s biggest cheerleaders. Startups at all stages have seen funding deals fall through and taken valuation hits amid crises such as the collapse of the TerraUSD stablecoin and the freezing of withdrawals at crypto lending platforms Celsius and Babel Finance. Companies like BlockFi Inc. are looking to raise funding at lower valuations than in previous rounds.

But FalconX’s new round shows that there’s still some investor appetite for crypto. The company’s valuation puts it on par with some of the biggest names in crypto. FTX US, the US branch of crypto exchange FTX, is also valued at about $8 billion, as is crypto custody firm Fireblocks Inc. Coinbase currently has a market capitalization of about $13 billion. 

FalconX Chief Executive Officer Raghu Yarlagadda said in an interview that the funding came together a few weeks ago, even as market conditions were changing. Yarlagadda declined to provide specific revenue numbers, but he said the company was profitable in the first quarter of this year and is on track to be profitable in the second quarter, despite the recent downturn. he said the company’s strategy has helped insulate it against recent volatility.

“Our ethos is to be market-risk neutral and not to bet against the customer,” Yarlagadda said.  

Even as other companies trim their headcount, FalconX is looking to build out its 200-person workforce by adding 30 to 40 people by the end of this year, Yarlagadda said. The company will also use its new funding to fuel acquisitions in the data analytics and engineering spaces in order to build out its suite of services.

“Institutions do want a one stop-shop — that insight is very, very clear,” Yarlagadda said.