Crypto and digital-asset trading platform FalconX more than quintupled its valuation in five months to $3.75 billion.
The San Matteo-based crypto company has been profitable for roughly a year, according to Chief Executive Officer Raghu Yarlagadda. He said its revenue grew by a multiple of 30 times in the year leading up to June 30.
Although Yarlagadda declined to provide a specific revenue figure, he revealed the company’s customer-triggered monthly transaction volume reached over $10 billion.
Clients of FalconX, including hedge funds, venture funds, and payment providers, benefit from the platform’s more reliable pricing. This is due to its connectivity with over 100 venues, including cryptocurrency exchanges like Coinbase and FTX, as well as proprietary trading firms and OTC desks. According to Yarlagadda, FalconX doesn’t take on exposure to market movements by over-collateralizing loans or reserving the right to liquidate positions.
“As institutional investors continue entering the cryptocurrency market, FalconX has significantly scaled its business and product lines to meet their needs,” said Scott Shleifer, a partner at Tiger Global Management. The asset management firm invested in FalconX earlier this year when it raised $50 million to achieve a $675 million valuation.
Yarlagadda said investors had established conviction around the company partly due to its growth trajectory. This is augmented by a gross margin profile close to 80%, a similar level to some enterprise software companies.
FalconX’s existing investors include Coinbase Ventures, Accel, Lightspeed Venture Partners, and Avon Ventures. Its clients include Galois Capital, QCP Capital, Hehmeyer, and Three Arrows Capital.
Yarlagadda said FalconX will spend its recent funding on scaling up. This will include hiring staff to further develop technical infrastructure, as well as global expansion, especially in Asia. Additionally, he mentioned launching products inspired by customer requests. For instance, a delayed settlement product, which allows institutions to settle in 20 business days.
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