Inside the Deal: Coinbase

Kanishka
November 1, 2023
Startup Investing

In this week's Inside the Deal series, we're taking a look at the first investors of Coinbase. We previously covered the Coinbase Mafia which you can check out over here.

Coinbase is the crypto giant that has reshaped the landscape of cryptocurrency and traces its origins to 2012 when Brian Armstrong, a former Airbnb engineer, and Fred Ehrsam, a former Goldman Sachs trader, started the company. 

It all began when Armstrong received an initial boost of $150,000 from Y Combinator, while Ehrsam was drawn into the fold after encountering Armstrong's posts on Reddit.

The two founders had a simple yet profound goal: to facilitate the seamless and secure transfer of Bitcoin for anyone. 

Over time, this vision evolved, and Coinbase now stands as a leading gateway to the broader crypto economy. As the largest cryptocurrency exchange in the United States, it's headquartered in the bustling tech hub of San Francisco.

About - Coinbase

A few of the early investors in Coinbase

Influential investors who participated in Coinbase's funding early rounds include Y Combinator, Union Square Ventures, Red Swan Ventures, SV Angel, Andreessen Horowitz, BBVA Ventures, Ribbit Capital, and Greg Kidd.

Angel investor Liron Shapira turned his $10,000 investment in Coinbase into a smooth $6 million. He was one of Coinbase's earliest investors back in 2012, but in 2021, before the crypto market collapsed, he sold his stake.

Garry Tan, CEO of Y Combinator and co-founder of Initialized, invested $300k in Coinbase back in 2013, plus additional rounds, which amounted to a $680 million stake when Coinbase went public.

Going public

Coinbase's monumental public debut in April 2021 signaled a new era in the cryptocurrency world, affirming the legitimacy of this digital financial domain. 

Coinbase emerged with a valuation of $85 billion, catching the attention of both investors and enthusiasts. This pioneering move differed from the conventional initial public offering (IPO) as Coinbase opted for a direct listing, allowing existing shareholders and investors to capitalize on their investments. 

Notably, Union Square Ventures, one of Coinbase's early supporters, turned a $5 million investment in 2013 into a remarkable $4.6 billion eight years later.

Undoubtedly, the most substantial investment came from Andreessen Horowitz, leading a $25 million Series B round with shares priced at a mere $1 apiece. 

They later acquired an additional 3.5 million shares from Union Square Ventures, making their stake worth nearly $10 billion by April 2021. Meanwhile, Ribbit Capital emerged as the third-largest investor, owning 12 million shares valued at $3.9 billion during Coinbase's public listing.

Coinbase's success not only fueled the financial aspirations of its investors but also ignited a fervor for cryptocurrency and blockchain startups among venture capitalists. 

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