Bitcoin Wallet Startup Coinbase Raises $25 Million from Andreessen Horowitz
Coinbase Raises Venture Funding to Capitalize on Bitcoin Exuberance
Among the companies providing cloud Bitcoin wallet services, Coinbase has some of the greatest momentum over the last few months, which is a long time in the Bitcoin world.
And today, they are doubling down on that momentum with a $25 million round of funding from prolific venture capital firm Andreessen Horowitz.
Buying Bitcoin is hard. It’s hard to setup an account, it’s hard to send money into an exchange, and it’s hard to get USD back out.
Much of these liquidity challenges have stressed the Bitcoin market over the last year. Japan-based Mt.Gox was once the world’s leading exchange and now it’s been eclipsed by BTC China.
Coinbase entered the scene with a simpler value proposition: ACH bank transfers to buy and sell Bitcoin. Technically, they are not an exchange but just a hosted wallet with an relatively easy onboarding.
Coinbase has also had its share of challenges.
A month ago, after the positive U.S. Senate Committee hearing, the price of Bitcoin skyrocketed to $900. Coinbase, along with most of the other exchanges in the world, fell apart under the increased trading volume. The company suddenly announced that it was hitting its normal buy limits and warned users that, while they could place orders, these orders would not be priced for up to 5 days.
Also, since Coinbase operates on bank transfers, buying Bitcoin is not instant. It takes 5-6 days after making a purchase to have the Bitcoin in your wallet.
Coinbase’s mobile strategy has also been hit. The company launched an iPhone app that was taken down by Apple after a few weeks.
However, even despite these challenges, it is clear that Coinbase is growing. The company now has over 600,000 customers transacting with them, and much of that growth has been in the last few months.
This round of funding and endorsement from Andreessen Horowitz is sure to both put Coinbase in a position to take bigger bets on growth and kick off a wave of venture funding for other Bitcoin startups.