Blockchain infrastructure provider Chain Inc. announced Thursday it has raised $30 million in equity funding from a syndicate of prominent players in the financial and payments industries, including Capital One, Citi Ventures, Fiserv, Nasdaq, Orange and Visa. Jim Robinson III, a former American Express CEO and RRE Ventures founder, has joined Chain’s board of directors.
The San Francisco-based company’s newest partners will also join it in creating a Blockchain Working Group to examine the application of this technology in numerous markets and adopt a collaborative approach to interoperability. Chain said in its press release that the group will hold bi-annual meetings that will also include leading technologists, academics and researchers working on blockchain technology.
“A blockchain is more than a financial technology – it’s a strategy,” said Chain CEO Adam Ludwin in the press release. “Applied intelligently, blockchain networks fundamentally improve how assets move between parties, and we are thrilled to be partnering with the organizations we believe are best positioned to capitalize on the inevitable changes in market structure that are on the horizon.”
Chain works with major institutions to design, deploy and operate blockchain networks that are created specifically for particular markets and assets. The company said these private networks, which typically do not use Bitcoin but are based on the digital currency’s same open protocols, can be interoperable with one another and other open digital currency networks.
Having launched just more than a year ago, Chain already works closely with several leading institutions, including First Data and Nasdaq. In June, Nasdaq and Chain announced a partnership to make digital ledger technology available to private firms that issue and transfer shares on the Nasdaq Private Market.
“We believe in the company and we think it is important to be close to the technology being developed. We’re putting our money where our mouth is in following and backing the company’s continued success and development,” said Jean-Jacques Louis, Nasdaq’s senior vice president of strategic initiatives, to Forbes magazine.
The Wall Street Journal reported that a valuation for Chain was not disclosed as part of this fundraising initiative; however, according to Forbes’ own estimates, the Series B round brings Chain’s valuation to approximately $150 million.
Speaking with Forbes, Ludwin said that he believes that blockchain technology will revamp the financial services industry not only through startups as previous disruptive technologies did, but also through existing financial institutions, partly due to issues of consumer and regulator trust.
“We’re a small technology company, and we are trying to [bring] this big network change to the world of financial services. How are we going to effect this change and bring this technology to market on our own?” said Ludwin to Forbes, adding that venture capital funds would bring them more cash and a new board member and advice from that company, while not helping them reach their goals.
Forbes reported that over the past few months, Chain realized that its customers were interested in obtaining a stake in the firm in order to get close to the technology as it develops, helping to advance it with their own internal resources, and connecting with other institutions around it in a neutral manner.
“We realized that we could be that neutral ground, that we could help institutions partner and find other entities who could pay critical roles in the network that they wanted to build,” Ludwin said. He told Forbes that Chain selected investors who could serve as natural partners, with, for example, Visa being the largest card network in the world.
Jim McCarthy, Visa’s executive vice president of innovation and strategic partnership, told Forbes that this investment is an extension of the work Visa has done with other technology partners, such as Apple and Google. Visa is interested in exploring blockchain technology particularly beyond retail point-of-sale, an area that the firm already covers well. On the other hand, said McCarthy, “business-to-business spending or business-to-government spending is a much larger pie where we have very little penetration,” and that might lend itself to an area where it can take advantage of the blockchain.
“One of the things we liked about Adam and the Chain folks is how they were thinking about using the banks and leveraging a network like the one Visa has to use blockchain as a new network protocol and to leverage what banks do well in managing risk,” said McCarthy to Forbes. “When we looked at the other folks coming into the round, like Citi, Capital One, Fiserv, it showed that there was a common point of view.”
The magazine reported that with $13.7 million in funding already in the bank, healthy revenues and projections of profitability in 2016, Ludwin rhetorically asked why Chain would need $30 million in funding now.
“There will inevitably be a very uncertain and winding path between today’s world and a future world where all assets are digital,” Ludwin told Forbes. “And the reason it will be winding is because there will be legacy systems that will need to be migrated, there will be regulatory questions that need to be dealt with, there will be institutions who will fight against this because it will disrupt them and it will reduce their role in a future system. So we thought, this is not like we are going to build these networks and be done in six months. This is a long-term, uphill, difficult, some would say fairly crazy journey that we think are about to go on.”
Fundraiser image – Source