Kraken

Pre-IPO

The fourth-largest crypto exchange in the world by trading volume with stacking and margin trading

Mark Price
$73 0% a year
Annual Price chg.
0%
Valuation
$14.50B
Funds Raised
$137M
Last Round
$14.00M 2020
Round Date
2020, B

About the Company

The U.S. cryptocurrency exchange Kraken, launched just two years after Bitcoin, provides access to trading between 100+ digital assets and serves about 9 million users globally.

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In 2021 Kraken recorded a surge in business growth and the number of new users that signed up on the platform. Several investment banks have set their price target for bitcoin. Guggenheim Investments predicts that it will reach $400,000 over a short period of time, while Citibank believes bitcoin should be worth $300,000.

Business Growth Phase

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Market Opportunities

Bakkt Holdings, the digital-asset financial firm, estimates that the market of digital assets will increase to $5.1T by 2025. In April 2021 the value of the cryptocurrency market topped $2T for the first time.

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In the first quarter of 2021, the number of new Kraken users jumped four times, compared to the second half of 2020. Spot trading volume in Q1 grew 1.5 times over spot trading volume recorded throughout 2020 to reach a record level of $160B. In comparison, trading volume on Coinbase was $335B in Q1 2021.

Financials and Valuation

Kraken has raised a total of $137M from 28 investors, including Digital Currency Group (invested in Coinbase, Luno, Curv), Blockchain Capital (invested in Coinbase, Bitnet) and others.

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The trading volume on Kraken in 2021 was $574B. Kraken’s CEO Jesse Powell said that the company is in talks with investors regarding a new funding round. Noting that Kraken has a strong balance sheet, Powell added that the company is not in a rush to raise capital. А new round of financing could value the company at $20B. In June 2021, Jesse Powell said that Kraken is “doing all the prep work” to become a public company in middle-late 2022.

Risks

Sources of Kraken’s revenue are dependent on crypto assets and the broader crypto economy. Due to the highly volatile nature of the crypto economy and the prices of crypto assets, its operating results have, and will continue to, fluctuate significantly. The future development and growth of crypto are subject to a variety of factors that are difficult to predict and evaluate. If crypto doesn’t grow as expected, Kraken’s business, operating results, and financial condition could be adversely affected.

It is possible that Kraken will close a new funding round at a lower valuation than was anticipated earlier due to overall market volatility and the performance of Coinbase shares.

Kraken is subject to an extensive and highly-evolving regulatory landscape and any adverse changes to, or its failure to comply with, any laws and regulations could adversely affect its brand, reputation, business, operating results, and financial condition.

Low liquidity: investing in private companies at the pre-IPO stage is an opportunity to make money over a few years. If you exit early, the price may be significantly different from the purchase price or the selling process may take more than 1 month.