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Last week, the Wall Street Journal proclaimed that venture capital inflows into bitcoin companies paused. As it turned out, a little premature. Boston-based Circle Internet Financial just announced it has received $9 million in venture capital funding.
Circle's investors are Jim Breyer (AccelPartners) and General Catalyst Partners. The company was founded by Jeremy Aller, who is known for building and listing the Brightcove video platform (BCOV -0.38%). Circle plans to offer bitcoin payment acceptance tools for merchants and a convenient platform for buying, selling, transferring and storing bitcoins to bitcoin consumers, competing with BitPay and Coinbase.
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The service is currently accepting applications from users forparticipation in circle.com closed beta. We asked Aller how much "regular" currency it took to buy this domain. "It wasn't cheap," he answered by phone from Dublin, where the company is setting up international headquarters. “Getting a domain name was a difficult process. A week after we closed the deal, someone asked me, "Have you seen Dave Egger's new Circle book?"
Aller says he started learning about Bitcoin a year and a half ago, due to a flurry of articles in the media and on the recommendation of people he knew.
“I have been developing internet platforms for 20 years.My job has always been to build on the open standards of the Internet, and that has transformed entire industries,” says Aller. “When I looked at the development of the ecosystem around Bitcoin, it suddenly occurred to me that this is a global opportunity.”
Investors who have previously participated infinancing Brightcove, agreed with him. Circle's entry into the market adds another player with business experience and serious funding who will try to bring the Bitcoin system into the business mainstream.
“The bitcoin industry has undergone an incredibleevolution this year,” says Jacob Farber of the Perkins Coie Foundation. “A small group of early enthusiasts has been replaced by a generation of serious business people with funding who see bitcoin primarily as a payment system and a way to build a business, and not just an abstract philosophy.”
Aller says the funding that startedact "a few months ago" goes to product development, regulatory compliance, and marketing, in that order. The first person he and co-founder Sean Neville, the company's chief technology officer, hired as an employee was a compliance officer. The company is already registered with the Department of the Treasury as a financial services provider and is now working with individual states and plans to obtain licenses “wherever required by law for our operation. »
“When you look at the world of Bitcoin, startupsmoney is required to obtain licenses for financial services in 47 separate states,” Adam Shapiro, an expert at Promontory Financial Group, said at a recent conference. “Investors are not used to this. Usually startups grow up first, and only then they face government regulation.”
As noted by Coindesk, the funding roundCircle was the largest among bitcoin companies: “In comparison, Coinbase received $6.11 million in its first tranche of funding from Union Square Ventures, and BitPay received about $2.5 million from Founders Fund and various angels.”
“I'm sure we'll see how the major retailersnetworks around the world will start using Bitcoin-based systems,” said investor Jim Breyer in an interview with the New York Times. Breyer was an early investor in Facebook (FB -1.97%). Many in Silicon Valley believe that Bitcoin has the same huge potential as social networks in the past decade.
- Circle launches with $9m from Jim Breyer, Accel and General Catalyst in biggest ever bitcoin funding (coindesk.com)
- Brightcove Founder Raises $9 Million To Take Bitcoin Mainstream (libertycrier.com)
- Jeremy Allaire: From Brightcove to Bitcoin (finance.fortune.cnn.com)