FalconX raises $17M in financing to build the future of digital-asset trading

We are excited to announce FalconX’s $17M round of financing, from notable investors including Accel, Accomplice VC, Coinbase Ventures, Fenbushi Capital, Flybridge Capital, Lightspeed Venture Partners, and Avon Ventures, a venture capital fund affiliated with FMR LLC, the parent company of Fidelity Investments. The funding will be used to introduce new products, expand FalconX’s trade execution suite and scale infrastructure to support growing institutional demand for cryptocurrency. This reaffirms our long-term commitment to bridging the gap between traditional finance and the digital-asset ecosystem with the smartest trading platform in the market.

More broadly, we’re entering an era defined by the true digitization of value — whether Bitcoin, Ethereum or new experiments such as Libra, or Digital Yuan — much like what we saw in the early 2000s with the digitization of information on the internet. For open, permissionless and truly global digital assets to be adopted by mainstream institutions, today’s digital financial infrastructure is grossly inadequate. FalconX is building the connective tissue, with seamless price discovery, trade execution, and value transfer. Our technology will provide the infrastructure for the future of digital assets.

Cryptocurrency trading is the first use case but NOT the only use case of FalconX. Our first product saw more than $7 billion of value transacted in its first 10 months — scaling by word of mouth to over 100 institutional customers. Let me introduce the team and talent behind FalconX.

Birds of a feather

We enjoy constant learning, collaborative thinking, and a shared passion for building powerful technology that is simple & intuitive to use. Our founding team blends Silicon Valley and Wall Street, bringing experience from Google, Citadel, Goldman Sachs, Jump Trading, PayPal, Pantera Capital, WorldQuant, Kraken, and Peak6 Investments.

Risk management, compliance and security are core to our business and enable us to scale a healthy and sustainable ecosystem. Prabh and I are Accel and Google alums and believe the best way to ensure these practices is building them into our technology itself, ultimately creating a competitive advantage for FalconX. These principles will enable us to execute towards our vision outlined in Phase 1 and 2 below.

Phase 1: building blocks

The number of institutions seeking secure and reliable digital asset trading services continues to rise, but the market remains drastically underserved. FalconX exists to provide a solution for institutions, and its impressive growth in just under 12 months — with nearly $3 billion in volume for Q1 2020 — is validating this market demand.

FalconX is a digital asset trading platform that provides clients fast, secure, and reliable execution, using data science to eliminate slippage and hidden fees. We deeply understand customer needs and chose to act as a principal. This structure makes us the sole counterparty to our clients, enabling fast execution of trades, guaranteed prices, and tight spreads. For our clients, we pull from structured and unstructured liquidity, resulting in deeper and more reliable liquidity. We see deep liquidity and excellent execution, from Phase 1, as the foundation powering future applications.

Phase 2: cross-border b2b payments

Leveraging FalconX’s deep liquidity and execution, we are well positioned to power B2B cross border payments — one of cryptocurrency’s most compelling use cases. B2B cross-border payments are 100X larger than C2C or B2C remittances, with $127 trillion in total volume and a TAM of $127 billion. We plan on using the same connective tissue to power this market — leveraging cryptocurrency as the transmission rail.

Our technology is token agnostic, giving us freedom to choose whichever digital asset or a combination of digital assets (BTC, XRP, ETH, etc.) are best suited to power a specific cross-border payment — built on our deep liquidity and reliable technology from phase 1. Most companies have approached solving this problem without a focus on deep liquidity; an integral component to enable seamless conversion over any quantity and size.

Here are the key benefits of crypto transmission:

• Fast — there’s a better way to transmit money as opposed to navigating a series of intermediaries (banks, money transmitters, etc.), significantly enhancing the speed of transactions.
• Affordable — current rates fall between 1% — 3% per transaction. Crypto dramatically improves cost efficiency, reducing paperwork & errors and utilizing effective foreign exchange conversion.
• Transparent — users can track real-time the status of their transactions, a problem which plagues cross-border payments today.
• Reliable — most blockchains have never gone down, operate 24/7, and are immune to the inefficiencies of any single central party.

Closing gaps and eliminating inefficiencies

We assembled the FalconX team with incredible people from the fields of data science, technology and finance. Together, we aim to radically improve the economic universe. Our goal is closing the gap between traditional finance and the digital-asset ecosystem while serving the market with the most trusted trading platform in the world. Next, we plan to revolutionize outdated cross-border payments, making the slow and costly processes involved extinct. These two phases represent only the beginning of our blockchain journey.

To all our partners and counterparties who have helped us become one of the fastest growing fintech companies in Silicon Valley, thank you. We are honored to have the opportunity to serve you each and every day.

To continue learning about our company, please connect with Raghu on Twitter and LinkedIn as well as Prabhakar on Twitter and LinkedIn. Also, follow FalconX on LinkedIn and Twitter.

Whether you are a trader, an institutional investor or a crypto enthusiast, it’s going to be a story worth tracking. So stay tuned for more news and helpful insights from FalconX.

About the founders

FalconX was founded in 2018 by Raghu Yarlagadda and Prabhakar Reddy. Raghu is an engineer and an entrepreneur. Prior to co-founding FalconX, he worked at Google, where he was instrumental in scaling Chromebooks to $3 billion in revenue for Google and its partners. Prabhakar, an engineer and a serial entrepreneur, exited his last venture to an Accel Partners portfolio company, prior to joining Accel as an investor. At Accel, one of the largest and most successful VC firms in the world, Prabhakar focused on Blockchain, B2B, and Enterprise SaaS investments.

Story authored by my co-founder @RaghuYarlagadda