Mergermarket: Hodl Finance prepares for debt and equity funding round

HODL Finance, a Lithuanian financial services startup issuing loans in exchange for cryptocurrencies as collateral, is planning to seek debt and equity financing this autumn, Managing Director and co-owner Vytautas Zabulis said.

The minimum plan is to secure funding of USD 24M, out of which USD 18M would be equity from a venture capital fund that invests in blockchain technology companies, Zabulis said. The remaining USD 6M would be a debt from an institutional investor or invoice financing specialist able to take cryptocurrencies as collateral, he added.

The maximum plan foresees funding of up to USD 40M, with USD 18M equity capital and USD 22M debt funding, he said. He declined to comment on the company’s targeted valuation. The company has not yet decided if it will involve financial or legal advisers for the funding round. The company ran a ten-day test measuring market appetite for crypto-backed loans and received almost USD 4M worth of loan applications from individuals, Zabulis said.

HODL Finance is preparing to run another test to measure how many initial applications it could turn to actual loans, he said. It has secured debt financing for the test from an unspeciíed investor and expects the results in October, Zabulis added.

After that the company will have the numbers for equity investors and will launch equity funding round, he added. The funding will go towards financing loans, as well as for the company’s development in target markets, regulatory and safety measures, Zabulis said.

HODL Finance will target the US, Canada, South Korea, Japan, Turkey, China, Brazil, Australia, Germany and the UK, he added. It plans to start operations in the 4Q18 will target a loan portfolio of USD 40m in 2019, Zabulis said.

In 2020, it expects to increase its loan portfolio up to USD 100M, he added. The company will also issue credit cards and introduce leasing services via e-shops, he said.

The company anticipates it will issue loans of up to USD 25,000 for private persons and up to USD 100,000 for companies in exchange for various cryptocurrencies as collateral, Zabulis said.

It will have short-term loans of up to one month with an extension option and long-term loans of up to three to four years, he said.

HODL Finance’s loan-to-value ratio will stand at 60%, Zabulis said.

The company was founded earlier this year, it is controlled by the owners of Lithuanian peer-to-peer lending company Savy, Zabulis said, adding he personally has close to 50% stake and controlling vote.

HODL’s team is also among the shareholders, he said.

Zabulis named New York-based Celsius, Swiss ETHLend, and Denver, Colorado-based Salt among competitors.

Crypto background

In crypto, there has been a lot of talk about stable coins and pegged cryptos in the past few months, not to mention Menlo Park, California-based VC Andreesen Horowitz starting its first crypto dedicated venture fund a16z crypto of USD 300M in June.

Boston, Massachusetts-based mobile payments and cryptocurrency trader Circle Internet Financial closed a funding round of USD 110M led by Bitmain, the Chinese bitcoin miner.

Intangible Labs, an Austin, Texas-based cryptocurrency startup, and developer of the Basis project, announced in April it raised USD 133M in a private placement from a group of investors, such as Bain Capital Ventures, GV, and a number of others.

Oasis Labs, the Berkeley, California-based blockchain computing company, announced it has raised USD 45M from a16zcrypto, Accel, Binance, DCVC (Data Collective), Electric Capital, Foundation Capital, Metastable, Pantera, Polychain and more, in early July.

In June, the New York-based blockchain financial solutions specialist AlphaPoint secured USD 15M from Galaxy Digital Ventures, reported Forbes.

In July, New York-headquartered crowdfunding specialist Republic announced it raised USD 12M in a round led by Binance Labs and NGC ECO Fund, as reported. Founded by AngelList alumni, Republic has yet to release its first security token.

Harbor, the San Francisco-based compliance platform for tokenizing private securities, announced USD 28M in new funding in April. The round was led by Founders Fund with participation from new investors Andreessen Horowitz and Pantera Capital, as well as a group of other investors.

This article appeared on Mergermarket and is completely owned by the outlet. HODL Finance has received the consent of Mergermarket to republish the article.

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