Coinbase Backed Crypto Trading Firm; Amber Group, Hits $1b Valuation After Fresh Funding

Hong Kong-based cryptocurrency startup and financial services firm – Amber Group, has raised $100 million from investors rushing to back their companies with crypto services.

After the funding round where the company raised $100 million from investors, the value of the Hong Kong-based start-up went up to $1 billion. The funding round was led by investment bank China Renaissance and saw participation from other high-profile investors including New York-based Tiger Global Management. Other existing investors such as Coinbase‘s venture arm, were part of the funding round.

The latest funding round is a continuation of the funding activities that have become quite common in the cryptocurrency industry.

According to data from PitchBook provided to CNBC, in the second quarter of 2021, the amount of venture capital investment into cryptocurrency and blockchain start-ups ran up to $14 billion. In the same period last year, venture capital investment totalled $600 million.

This year, the interest in cryptocurrencies, mostly Bitcoin, has spiked more than in previous years. This year, many global companies started to associate with cryptocurrencies and institutional investors jumped in. Tesla, for example, started accepting Bitcoin earlier this year as a means of payment for its electric vehicles, before pulling the brakes on it out of environmental sustainability concerns. Other global giants that have in one way or the other associated with cryptocurrencies include Jack Dorsey’s Square, Apple, MasterCard, BNY Mellon, Google Pay, Samsung Pay, etc.

Amber Group sells products to institutional investors and wealthy individuals including algorithmic trading and lending products. Amber Group is different from other digital exchange platforms as it allows users to trade individual digital coins. The company brings “private banking experience to every day customer”, Amber Group CEO Michael Wu mentioned. He also mentioned that the company offers investors with quite a plethora of cryptocurrency products that they can choose from to invest in.

The company revealed that it is on track to book revenue of $500 million by the end of this year and has been profitable since it started out.

Between 70% and 80% of the company’s revenue are derived from so-called net interest margin — a measure of lending profitability, the company’s CEO revealed. The company operates by collecting customers’ deposits and offering them an interest rate. Amber Group then lend out the money from its pool of deposits to other entities at higher interest rates and make money from that spread and about 15% of revenue comes from trading fees.

According to the company’s CEO, Amber Group is making a push to gain individual investor customers as the majority of the company’s customers are institutional investors. “We don’t advocate heavy speculation or high use of leverage, rather we want our customers to be more long term, focus on risk management and get stable and attractive yield”, he said.

Amber Group plans on utilizing the fresh capital raised to “hire even more aggressively” and to make strategic acquisitions in areas such as cybersecurity. The company is also looking to acquire others that have regulatory licenses in certain jurisdictions, which could allow Amber Group to enter a new market, the CEO revealed.