Circle Cuts Deal to Buy Crowdfunding Platform SeedInvest
Circle is buying SeedInvest to help startups raise cash with crypto.
Goldman Sachs-backed cryptocurrency platform Circle announced on Friday it had agreed to acquire equity crowdfunding firm SeedInvest to help startups issue digital assets and provide its own clients with exposure to a wider variety of tokens.
According to Circle’s post, the deal is pending approval by the Financial Industry Regulatory Authority (FINRA). The acquisition will add 30 members to Circle’s team. The terms of the transaction have not been disclosed.
Founded in 2012, SeedInvest allows small, privately-run companies to source capital from a large pool of individuals and accredited online investors. According to the website of the New York-based company, over 150 startups have benefitted from the service, with close to 200,000 investors helping startups raise more than $115 million.
Once cleared, the deal will enable SeedInvest to expand its offerings to support cryptocurrencies, including fiat stablecoins and tokenized securities. Additionally, companies will be able to raise capital through a regulated platform, get access to retail investor portfolios via Circle Invest, and provide investors with secondary market liquidity on Circle’s cryptocurrency exchange.
For its part, Circle expects the acquisition to “accelerate our strategy of delivering a token marketplace that enables businesses and individuals to raise capital and interact with investors using open crypto rails and infrastructure.” The company added it was making a step forward in its quest to list tokens that may be considered securities.
“This [SeedInvest] was a company who had been at the forefront of collaborating with government to figure out how to make it possible to innovate in the way people raise capital. Crypto securities are going to become a major new category of securities that ultimately every business is going to adopt, just like every business has a website,” Circle CEO Jeremy Allaire told Bloomberg.
The acquisition of SeedInvest comes within months of Circle buying cryptocurrency exchange Poloniex, further establishing itself as one of the most diversified players in the crypto space. The company has also revealed plans to pursue registration as a brokerage and trading venue and has launched a US dollar-backed digital token called USD Coin (USDC).
In a separate development, Circle announced early in October the launch of a new feature for its Circle Invest app. Dubbed “Collections,” the tool aims to simplify crypto investments, allowing users to invest in three “themes” of cryptocurrencies: Platforms, Payments, and Privacy.
In a blog post on Thursday, the company said the various crypto assets in each collection are weighted according to their respective market caps. After choosing a collection category, users can invest in the entire category in one swoop. “Collections” will also provide educational content so that users can make informed choices about their investments.
“As we continue to list the crypto assets associated with the projects on Circle Invest, we will also introduce new collections and relevant educational material so that customers can invest in the categories that most interest them,” Circle added.