Welcoming Chainalysis to the Converge Portfolio
Last week, Chainalysis announced its $1.6M seed round to expand the team and continue to grow its presence as the leading provider of forensics and risk management solutions for blockchain businesses and financial institutions. We at Converge Ventures Partners are thrilled to partner with Chainalysis in this funding round.
Chainalysis’ solution detects suspicious activity in real-time and provides investigation tools for law enforcement to tackle cybercrime. The Company was part of the Barclay’s Techstars Fintech Acclerator in New York City.
Most information around blockchain has been clouded by negative headlines, connecting digital currencies to fraud, drugs, and the increasing need for cybersecurity. The blockchain technology however, provides a number of benefits including:
- Empower decentralized communities
- More transparency for regulatory reporting
- Immutable recordkeeping
- (Potentially) foster quicker settlement times
- Decreased counterparty risk and collateral requirements
The largest public blockchain is the one used by Bitcoin, with transactional value aggregating a market value of almost seven billion dollars (Coinmarketcap). In the next few years, we will see blockchain applications in meshnets, micropayments, tipping, remittances, crypto asset trading, insurance and a number of other areas. Just a couple months ago, we saw Overstock.com begin using the blockchain to issue equity securities.
In the early stages of blockchain adoption, banks, law enforcement, and Bitcoin exchanges have emerged as initial customers for Chainalysis. A leader in the Anti-Money Laundering space, the Company is working with these segments to provide transparency in the blockchain enabling visibility into criminal activity on the blockchain. The Company’s offering tracks digital identities on the blockchain, detecting suspicious activity in real-time and providing investigation tools. Chainalysis recently announced a signed MoU with Europol, and the Company will continue to work with regulatory entities and law enforcement agencies in the U.S., Asia, and Europe. As other applications for the blockchain gain traction, Chainalysis’ forensics solution will find new markets.
We are excited to partner with an all-star team, led by co-founders Michael Gronager, Jonathan Levin and Jans Moller. The team has unique experience in the world of blockchain: CEO, Michael Gronager served as COO for Kraken, the largest Bitcoin exchange in Europe, where he continues to serve as an Advisor. Jans Moller, Chainalysis’ CTO, was Principal Engineer at Mycelium, a Bitcoin wallet company. Jonathan Levin is a second-time cryptocurrency entrepreneur, having started Coinometrics in 2013.
According to Accenture, Blockchain companies specific to capital markets hit an estimated $75 million in investments for 2015, up from $30 million in 2014 – that number is projected to reach $400 million by 2019. This is a subsegment of the Bitcoin/ Blockchain space, and Goldman Sach’s December 2015 report shows significant ramping of investments in recent years:
Our Chainalysis investment falls within Converge’s focus on the continued adoption of the blockchain technology. We believe there is significant value in the decentralization and security behind the blockchain system, as well as a number of other value propositions. We are excited to work with Chainalysis – a company at the forefront of blockchain adoption.
As early stage investors, we will continue to explore blockchain applications beyond forensics. We are excited to introduce our first ‘blockchain’ related company to the Converge family, and to work with Michael, Jonathan and Jans and other team members. We’re also pleased to work with fellow Chainalysis investors, Point Nine Capital, Digital Currency Group, Techstars, Trifork and FundersClub.
Chainalysis can be reached via Twitter @Chainalysis