Circle Acquires New York-Based Crowdfunding Startup SeedInvest
Goldman Sachs-backed Circle Internet Financial, a crypto unicorn with an asset base valued at over $3 billion, has reportedly set to complete the acquisition of crowdfunding startup SeedInvest.
Goldman Sachs-backed Circle Internet Financial, a crypto unicorn with an asset base valued at over $3 billion, has reportedly set to complete the acquisition of crowdfunding startup SeedInvest, Bloomberg reports.
Other than providing its own clients with exposure to an array of digital assets, the acquisition is likely to play an integral part in Circle’s efforts ‘to tokenize everything.’
Founded in 2012, SeedInvest specializes in crowdfunding and helps small, privately-run companies to source capital from a large pool of individuals and accredited online investors.
The New York-based startup has done well, using its broker-dealer SI Securities to facilitate access to its equity-crowdfunding services.
SeedInvest’s website states that over 150 startups have benefitted from the platform’s services, with close to 200,000 investors helping startups to raise more than $115 million.
SeedInvest will transfer 30 of its employees to Circle’s New York office, the startup confirmed in a press release.
The firm has attracted a lot of interest in the last year due to its flexible business model. Even though the company restricts access to some of its services to accredited investors, it has greatly simplified the process for retail investors to acquire company shares.
With as little as $200, a retail buyer can purchase shares in a given company, which is reportedly fifty times lower than your typical startup investment.
Circle looking to offer crypto-based securities
In an interview with Bloomberg, Circle CEO Jeremy Allaire explained that his firm had set its sights on the acquisition as an investment that would help make offering crypto-based securities easier.
At the same time, Circle sees this as a step towards becoming compliant with the Securities and Exchange Commission regulations regarding the issuance of security tokens.
Allaire believes the SeedInvest acquisition is the right move, as the New York-based crowdfunder has been aggressive in its efforts to find new and innovative ways for people and businesses to raise capital.
He also added crypto security tokens are quickly becoming a major category of securities. In the end, he says, every other business would have to adopt a security token “just like every business has a website.”
SEC regulation chills ICO investments
Trading and exchange platforms are increasingly becoming cautious about listing ICO tokens to avoid the risk of breaching securities rules. The SEC has previously stated that most of the coins in the market are securities, prompting major platforms to seek registration to remain compliant.
In June, Circle said that it would be seeking regulatory approval to operate as a brokerage. Other companies followed suit, with Coinbase announcing plans to acquire a broker-dealer as well. Cryptocurrency exchange Uphold announced similar plans in July.
Circle’s CEO commented on the move towards regulatory compliance as a way to make tokenization the new way of raising money. But he also sees a lot more happening, saying:
“It’s not just ‘how do we let companies do ICOs? It’s ‘how do we support the tokenization of everything?”
The race to tokenize everything isn’t an exclusively Circle affair, and security tokens are likely to flood the mass market in the coming year. Already, crowdfunding giant Indiegogo and Overstock.com’s subsidiary tZero have built security token exchanges.