On Friday, Austin-based fintech company Unchained Capital announced the closing of its $25 million Series A funding round.
Unchained Capital has built a financial services platform that caters to long-term bitcoin holders. Like other crypto companies, it allows investors to buy and store bitcoin in a secure vault. But beyond that, the company has also built a business supplying loans that use bitcoin as collateral.
While securing loans with collateral is nothing new — this is what both mortgage companies and pawn shops do — securing a loan with bitcoin provides a unique opportunity. As the popularity of bitcoin grows, many people are buying bitcoin to hold onto for many years, that way they won’t miss out the next time it surges in value. But people who hold onto bitcoin for long periods likely won’t want to sell it when they need access to cash.
Bitcoin collateral loans provides an alternative, allowing bitcoin owners to get access to cash without losing ownership of their assets.
This funding round was led by bitcoin tech solutions firm NYDIG and continues the partnership between the two organizations. In February 2021, NYDIG provided the company with $50 million in lending capital, which helped Unchained Capital rapidly develop its technology and accelerate its lending business. Over the past six months, Unchained Capital saw a 5x increase in its bitcoin-collateralized lending business.
To follow up on that success, NYDIG has agreed to a $100 million lending commitment in addition to leading the Series A funding round. This brings NYDIG’s total lending commitment to $150 million.
“Our existing partnership with NYDIG has unlocked significant value and the expanded investment to lead our Series A will help further transform our company as a leading financial institution for long-term bitcoin holders,” Unchained Capital CEO and co-founder Joe Kelly said in a statement.
While the lending commitment will help Unchained Capital finance its loans, the $25 million Series A will allow the company to grow as a whole. Michael Tanguma, the company’s managing director of client solutions, told Built In that the funding round will help Unchained enhance its bitcoin custody solution, build new financial products and bring its OTC services and lending desks to more states. Unchained’s services are currently available in about a dozen states, including Texas, Colorado, California and more.
Ecliptic Capital, Starting Line, Stronghold Resource Partners, TVP Bitcoin Venture Fund, Ten31 and Platform Ventures also participated in the company’s Series A round.