Leading bitcoin brokerage Coinbase recently raised US$100 million in a Series D funding round, which values the company at US$1.6 Billion. The round was led by IVP, with participation from Spark Capital, Greylock Partners, Battery Ventures, Section 32 and Draper Associates.
Founded in 2012, Coinbase is one of the world's largest digital currency companies. The company is best known for its hybrid Wallet and Exchange service, but has been focusing on becoming a retail and institutional exchange. According to the company, 9.2 million customers have 30.4 million wallets on the platform so far.
The cryptocurrency brokerage is the first company to attain the coveted title of Unicorn in the Bitcoin industry, a term first coined in 2013 by venture capitalist Aileen Lee. The mythical animal represents the statistical rarity of such a successful venture.
The new funding will be used to continue scaling, the company said on Thursday. The company will focus on three specific areas of improvement; Increase the size of its engineering and customer support teams "to improve the customer experience;" Open a GDAX exchange office in New York City, for professionals to trade digital assets; Invest in its Toshi platform, an Ethereum app browser "that provides universal access to financial services."
“Digital currencies are having their ‘Netscape’ moment.”
- Brian Armstrong, Coinbase CEO
Coinbase has experienced unprecedented growth over the last year, CEO and co-founder Brian Armstrong points out in his announcement. The company has exchanged over $25 billion USD of digital currency for customers since the start of this year. This amount is over five times the amount exchanged since launched in 2012 up to the end of 2016.
The company previously raised a total of $116.5 million in venture capital funding over four different rounds, making it the third most well-funded Bitcoin company, behind 21 and Circle Finance. Thursday’s addition of another $100m leapfrogs both of these companies, and easily makes coinbase the most well-funded startup in the Bitcoin and blockchain space.
However, Coinbase has received many complaints about its performance handling customer support. Armstrong admitted that “we haven’t done enough to keep up with the growth, and we’re taking steps now to correct it.” The company has been working on improving customer support since June, according to the CEO.
"Over the past few months, we’ve seen an unprecedented increase in the number of customers signing up to use Coinbase (4x since January 2017). As a result, our systems have been pushed to the limit. This has caused many customers to have a negative experience.”
Armstrong outlined the company’s plans for future growth in June, revealing the company’s roadmap for 2017, which started with hiring a consultant on scaling. The next step is to tackle the growing customer support issues, which they feel that they can accomplish during the third quarter.
The CEO plans to add staff to the point where they have reduced the first-response time for every customer to under 6 hours, and to less than 2 hours for customers with large balances. The third quarter should also see the introduction of phone support for high balance accounts.
Before the end of this year, the company plans to roll out support for “a wider % of customer base.” Additional security options such as Yubikey support will be introduced during the fourth quarter.
Thursday's announcement came only a day after the company announced that Fidelity Investments' customers can now view their Coinbase digital currency balances on the firm's website. “Once integrated, investors can view their Bitcoin, Ethereum and Litecoin balances alongside other accounts in their Fidelity Portfolio Summary View on Fidelity.com,” Fidelity explained.
“This integration [with Fidelity] demonstrates the continued commitment of traditional financial institutions to adopt digital assets and widen access for customers.”
The feature is a test project collaboration between Fidelity Labs, the firm's innovation arm, and Coinbase. “We’re eager to hear what Fidelity’s customers have to say,” said Hadley Stern, SVP and managing director of Fidelity Labs. “As in all of our prototypes, feedback from end users will help us understand the level of interest in this type of access, and to test the overall experience and functionality.”
Fidelity first started testing the facility internally in May. “Our research in digital assets is evolving,” Stern said, citing how the test started with simple employee-only and has since expanded to a broad customer pilot.
The company CEO, Abigail Johnson, is an outgoing bitcoin advocate and has offered her employees several ways to experiment with it. At Consensus 2017, she revealed that her firm had been experimenting with a few bitcoin-based projects, including accepting it at the headquarters' cafeteria and bitcoin mining.