The online wallet website Blockchain.info makes about $300,000 each month, according to Roger Ver, who is speaking at the Bitcoin Miami conference 2014. These figures have been confirmed by the @Blockchain twitter account. They make these profits mostly from advertisements on their website, which hosts an online wallet, and a very advanced block explorer.
These Angel Investors Want to Make Bitcoin ‘Sexy’ for Average People
At the Bitcoin 2013 conference in San Jose, Calif., last May, Michael Terpin noticed something missing. At the conference, digital wallet and Bitcoin exchange service Coinbase had announced a $6.1 million Series A round led by Union Square Ventures. But while venture capital firms such as Union Square had begun to make big investments in Bitcoin startups, no group of angel investors — who are usually the first to give promising early-stage companies a financial boost — had risen up to support this growing community.
“I’ve never seen a space where there are top-tier VCs putting money in, but no angels,” Terpin said to David Johnston, the founder of a startup called Engine, whose Google Chrome extension tackles information overload problems.
Along with a young startup founder and polymath named Sam Yilmaz, Terpin and Johnston founded BitAngels to fill the void. By the end of the conference, there were 50 angels onboard, spread across Austin, San Francisco, and New York.
Almost immediately, BitAngels began having an impact in the world of digital currency businesses. Earlier this week, the group announced that its members collectively had invested $7 million in Bitcoin startups in 2013. These funds were spread across 12 companies, including Bitcoin payment platform GoCoin, Bitcoin instant exchange Cash Into Coins — now renamed Express Coins — and CoinTerra, which makes Bitcoin mining rigs.
So far, BitAngels has just been laying the groundwork. “You couldn’t have had a Google in the internet until you had a Netscape,” Terpin says. “And you couldn’t have had a Netscape without a Cisco.”
Bitcoin Startup Investing Snapshot: VCs Deploy $74M Across 40 Deals in 2013
Venture capital investors from Andreessen Horowitz to Accel Partners are already betting that the bitcoin industry will see its share of big winners.
Despite questions about bitcoin’s future viability, venture capital investors are already betting that the bitcoin industry is here to stay. The largest bitcoin investment to date was Coinbase’s $25M Series B round led by Andreessen Horowitz in December. And just this week, A16Z co-founder Marc Andreessen brought the digital currency into the public eye writing in The New York Times that:
“Far from a mere libertarian fairy tale or a simple Silicon Valley exercise in hype, Bitcoin offers a sweeping vista of opportunity to reimagine how the financial system can and should work in the Internet era.”
As with the digital currency itself, overall venture investment into bitcoin startups is still small. In 2013, VCs put just over $74M into bitcoin companies across 40 deals. In our earlier research, we found that Q2’13 saw a jump in bitcoin deals and dollars. But after a quieter third quarter, Q4’13 saw the highest quarterly total of bitcoin financing ever at just under $50M deployed across 18 deals.
Coinbase’s notable funding round was the outlier among bitcoin deals last year, as seed-stage investments took 72% of all bitcoin deals in 2013. The average deal size in the bitcoin market for 2013 trended at $2.19M, while the median deal size to bitcoin startups stood at just $560,000.
The top 5 most well-funded bitcoin-related companies have combined to take $55M in aggregate funding and count notable investors including Union Square Ventures, Google Ventures and Accel Partners among their known venture backers.
The BitAngels incubator was co-founded by David A Johnston, Michael Terpin and Sam Onat Yilmaz. It has attracted quite a few big names since launch, including; Memory Dealers CEO and bitcoin evangelist, Roger Ver; Gyft CEO Vinny Lingham; Robocoin Asia chairman Brock Pierce; and Tradehill CEO Jered Kenna.
Las Vegas-based bitcoin investment fund CoinSeed announced a substantial investment of $5m in mining hardware on 23rd January.
CoinSeed revealed that it has acquired $5m worth of BitFury’s 55 nanometre bitcoin hardware, but that this is just its first step in its larger vision to become a large-scale bitcoin clearing house, one that will be able to someday process the real-time transactions it says bitcoin will need to truly compete in payments.
CoinSeed says it raised $7.5m from private investors in less than a month, and that it is aggressively investing in mining hardware to secure a leading position in commercial mining. In addition to Kauffman, CoinSeed’s team includes Zach Dailey, founder of LabRatMining, as well as other sales and technical employees. The company plans to raise an additional $15m over the next eight months to bring its total funding to $22.5m.
Kauffman noted that his experience securing investment was helped greatly by his tenure in the domain name sector 10 years ago. While he declined to mention names, he noted he relied on these past relationships as a means to secure necessary funding.