BlockFi: Driving the New Crypto Economy

An early mover in the crypto services space, BlockFi has continued to expand its product offerings.

Written by

Alumni Ventures

Published on

Read

2 min

Over a decade after Bitcoin debuted, there are still limited financial services available for cryptoassets. This proves challenging for individuals with a significant crypto portfolio, who must secure lending alternatives to hold onto their digital assets or use them as collateral. They’re often forced to weigh the risks of cashing out on exchanges and potentially missing a surge in value.

BlockFi, an Alumni Ventures Group portfolio company, is an early mover in the crypto services space backed by established industry investors. Launched in 2017 as a lender against cryptoassets, BlockFi is now well-positioned to become the leading financial services firm for crypto.

Addressing Crypto Pain Points

Traditional banking institutions have typically stayed away from lending against cryptoassets due to concerns about technical hurdles, shifting regulations, and a lack of derivative markets to hedge risk. BlockFi Founder and CEO Zac Prince faced this challenge firsthand when he couldn’t use his crypto portfolio as collateral for a real estate development project.

Prince launched BlockFi to address these pain points and offer diversified financial services specifically for cryptoassets. Initially a lender against Bitcoin and Ether, the company has expanded its loan offerings to include Litecoin, Stablecoin, and Gemini Dollar, along with a Bitcoin Interest Account and a crypto-trading platform.

Additionally, BlockFi has broadened its early focus on individual crypto owners and built a diversified customer base featuring prominent institutional clients. Their new products are designed to attract retail consumers who do not yet own cryptoassets. Based on their current growth, BlockFi is well-positioned to become a leading digital banking services firm and a meaningful bridge between traditional fiat banking customers and the new crypto economy.

Significant Support from Industry Leaders

BlockFi’s trajectory is due in large part to a seasoned leadership team led by CEO Zac Prince, a serial financial services entrepreneur who previously held executive roles at AdMeld (acquired by Google), Sociomantic Labs (acquired by DunnHumby), and Orchard (acquired by Kabbage). Co-Founder Flori Marquez was previously a portfolio manager and operations lead at Bond Street (acquired by Goldman Sachs), while CTO Mahesh Paolini-Subramanya helped grow blockchain innovator Factom from a valuation of $10 million to over $500 million.

Since its early fundraising rounds, BlockFi has also attracted the support of established investors in blockchain and fintech. The company’s 2018 seed round was led by the VC arm of ConsenSys, a blockchain software developer investing in companies building decentralized applications on Ethereum. BlockFi’s subsequent rounds have been led by Valar Ventures, a Peter Thiel fund, and Morgan Creek Digital, a hedge fund of Morgan Creek Capital specializing in blockchain technology.

Purple Arch Ventures, AVG’s fund for the Northwestern community, has sponsored multiple AVG investments in BlockFi, including the company’s $1.5 million seed round led by ConsenSys and $50 million Series C led by Morgan Creek. Other AVG funds investing in BlockFi included Castor Ventures (for the MIT community), Congress Avenue Ventures (for the U Texas community), and Nassau Street Ventures (for the Princeton community), as well as AVG’s Total Access Fund and Investor Syndicate.