Menlo Ventures makes the leap into crypto with a $40 million investment in a popular Coinbase competitor
Paul Szoldra/Business Insider
- Menlo Ventures, which hit it big with investments in Uber and Roku, just made its first investment in a cryptocurrency startup.
- The famed venture-capital firm led a $40 million funding round for BitPay, a bitcoin payment processor that competes with Coinbase and once competed with Stripe.
- BitPay claims to be the largest bitcoin payment company in the world, with $1 billion in e-commerce payments processed in 2017.
Menlo Ventures established itself as a major player in the Silicon Valley venture-capital market with investments in Uber and Roku, which both became big hits.
But there's nothing like cryptocurrency fever to spice up a venture-capital firm's portfolio.
In Menlo's case, it led a $40 million funding round for BitPay, a bitcoin wallet and cryptocurrency processing firm, BitPay announced Monday. The move marks Menlo's first investment in a cryptocurrency company.
The firm was drawn to BitPay because of the latter's growth and "stickiness with merchants and consumers," Menlo partner Tyler Sosin said in a statement. The firm was also excited about BitPay's business of processing cross-border and business-to-business payments, he said.
BitPay makes its money, in part, by helping companies including Microsoft accept bitcoin as a form of payment on their e-commerce sites.
"We felt the company had identified a killer use for crypto," Sosin said.
Venture firm G Squared and Asian financial technology company Capital Nine also participated in the funding round.
By its own account, BitPay is the biggest bitcoin payment provider in the world. According to the company, it processed $1 billion in bitcoin payments in 2017.
But the bitcoin market has proven challenging and volatile. Spikes in the price of bitcoin transactions have caused several online retailers to stop accepting the cryptocurrency. In December, BitPay itself briefly stopped letting people make transactions valued under $100 when network transaction fees topped more than $30 per purchase.
One of BitPay's biggest competitors is Coinbase, the $1.6 billion cryptocurrency exchange, which offers its own cryptocurrency payment processing service for businesses. BitPay also competed with the credit card processing company Stripe until January, when Stripe dropped support for bitcoin.
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