Circle Betting Big on Token-Based Crowdfunding – Acquires SeedInvest

Circle, the Goldman Sachs-backed cryptocurrency firm, has bought SeedInvest, a licensed broker-dealer as part of its vision of a blockchain-based financial ecosystem.

Firm’s Second Acquisition of the Year

Circle, a peer-to-peer payments technology company, is betting big on blockchain technology and digital assets. The company, which is backed by banking giant Goldman Sachs and other investors like Bitmain, Breyer Capital, Oak Investment Partners, Accel, and Pantera Capital, has last week acquired Seedinvest, an equity crowdfunding platform.

As part of its growth plan, Circle has taken multiple strategic decisions, including the acquisition of the cryptocurrency exchange Poloniex earlier this year; launching the US Dollar Coin (USDC), a stable coin; creating new bundled offerings; and now the addition of SeedInvest.

The latest deal seems to be backed by Circle CEO Jeremy Allaire’s belief that, within the next few years, current financial systems will move to blockchain-based solutions.

In an interview at the Security Token Academy conference in Manhattan, Allaire told CNBC:

If we zoom out, there’s going to be this tokenization of everything.

Explaining that the firm was already licensed, he added:

Eventually these marketplaces will have tens of thousands, if not hundreds of thousands of assets — so the next piece was a broker dealer.

Shared Vision and Goals

According to SeedInvest’s CEO, the firm’s crowdfunding strategy has been similar to how blockchain startups raise funds through ICOs. The New York-based firm, which started in 2012, connects investors with startups through its online platform. The company’s broker-dealer license was perhaps a key factor for the deal to go through. Despite many fraudulent ICOs, Allaire believes that the crowdfunding method is here to stay.

SeedInvest CEO Ryan Feit, who sits on the fintech committee of FINRA, the brokerage industry’s regulator, said:

We’re chasing a similar vision of changing the way businesses raise capital. It’s a different form of enabling companies to raise money, and another form of alternative assets for investors.

Allaire added:

It was an incredible experiment in crowdfunding, and tokens and smart contracts as a new capital formation model. The growth in ICOs were really a pivotal moment for this concept of how can businesses issue digital investment contracts directly over the internet, from all around the world.

Allaire plans to “marry” its earlier acquisition Poloniex to SeedInvest so that tokens can be made available to high net worth as well as mom-and-pop investors. His vision includes tokenization of existing financial instruments like stocks to make them faster and more efficient using blockchain technology.

Despite the market slowdown this year, Circle has gone ahead and made some big decisions like its acquisition of Poloniex and now SeedInvest. The company obviously believes in the long-term sustainability and adoption of the blockchain technology.

What’s your opinion about Circle’s new acquisition? Do you think we will see more mergers and acquisitions in the blockchain space? Let us know in the comments below.

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