Amber Group, a Hong Kong-based crypto financial services company, has become the latest unicorn in Asia’s growing crypto industry after raising US$100 million in a Series B funding round with a US$1 billion valuation, according to a company announcement today.
China Renaissance, a China-based investment banking and investment management company, led the round with participation from Tiger Brokers, Tiger Global Management, Arena Holdings, Tru Arrow Partners, Sky9 Capital, DCM Ventures and Gobi Partners. Previous investors Pantera Capital, Coinbase Ventures and Blockchain.com also participated in the round.
The latest funding round boosts Amber Group’s valuation by 10 times its earlier Series A round in 2019, when the company raised US$28 million at a US$100 million valuation and comes as the company expands its operations to bring its crypto finance offerings to more regions.
From $100 million to $1 billion valuation
“It has been always about bringing the best partners to help us scale and grow,” Michael Wu, co-founder and CEO of Amber Group, told Forkast.News in an interview.
“In 2019, we did our Series A to bring partners like Paradigm, Pantera Capital, Coinbase to help us scale from a niche startup in crypto finance space to a more institutional and a larger player, and a year and a half later, we moved into the category of being a unicorn,” Wu said.
“It’s only the very beginning for us to go from one to 100,” Wu added. “To do that we need more institutional partners and investors that have the expertise and resources to help us get there.”
“This US$100 million raise will definitely help us to further increase our own capital base, which means more buffer to grow more aggressively, hire the best talents, build the best infrastructure, get all the licensing arrangements… to market aggressively and bring our brand to our global customer base,” Wu said.
“If we continue to perform the way we have been performing, continue to have our customers loyal to us and have them bring more newcomers into the space, then, I think it’s not unrealistic to hope that we go from a billion dollar company to a 100 billion dollar company or even beyond,” Wu said.
Next cycle of crypto adoption
Founded in 2017, Amber Group is one of Asia’s leading liquidity providers, offering services such as algorithmic trading, market-making, high-frequency trading, over-the-counter trading, borrowing and lending, and derivatives to its customer base of institutional and individual investors.
With a presence in Hong Kong, Taipei, Seoul and Vancouver, Amber Group has emerged as a crypto trading powerhouse in the region. “We have been profitable since inception, and with growing revenues across all business lines, we are now annualizing US$500 million in revenues based on January to April 2021 figures,” said Wu, in a statement. “We now account for 2 to 3% of total trading volumes in major spot and derivative markets and are continuing to see growth. Our cumulative trading volumes have doubled from US$250 billion since the beginning of the year to over US$500 billion.”
Wu says he “definitely sees” another big cycle of crypto adoption within the next five years like the one in 2020 and 2021. “More and more institutions, individuals and governments realize fintech is the way to go and crypto finance provides a solution to revolutionize financial services to be more efficient, open and fair to all the customers,” he said. “Within three to five years with the next cycle of adoption, crypto will probably touch a billion people or more.”
“There are more and more investment firms, traditional funds, wealth managers, multi-family offices, corporates wanting to allocate to crypto and wanting to understand crypto better,” said Wu, adding that Amber Group’s predominantly institutional customer base continues to see rapid growth.
But a new generation of younger investors — while not that wealthy, yet — is emerging. “They’re very digital native and they tend to understand and pick up things very fast,” Wu said. Last September, Amber Group launched its mobile “Amber App” product and web portal to expand its retail customer base.
Calling Hong Kong’s plan to restrict crypto trading to professional investors “a bit unfair” as that would limit in particular the younger Hong Kong population from participating in crypto, Wu said that Amber Group’s stance was to be compliant. “If that bill really passes eventually, that means we have to cut off access for whoever cannot participate,” Wu said. But he is hopeful that the regulators will reconsider in the future when they understand the space more.
Amber Group currently manages about US$2 billion in trading capital, based on Bitcoin and Ethereum prices, according to Wu. The company has been active in decentralized finance (DeFi) as a liquidity provider, trader and incubated projects such as KeeperDAO. “Going forward, we’ll continue to integrate DeFi (decentralized finance) into our product offerings and services,” said Wu. “DeFi is here to stay. It will be as significant, if not more significant, than traditional finance eventually.”
On the current crypto market correction, Wu said he was not worried about short-term market cycles. “In fact, we were worried when the market was a bit too overheated. We don’t want our customers to be burned by investing at peak,” he said. “So right now, I tend to tell our customers, prices might stay around here or even might correct a bit further, but these are safe long-term entry levels.”
“This is a time for companies like ourselves to build further for our customers and to prepare for the next wave of adoption,” Wu added.
Will Amber Group go public?
Amber Group started with a small team of less than 10 in 2017 and now has more than 330 employees globally, with plans to bring more on board.
Wu sees going public as a “natural outcome in some way in the process of building the company” and that it could be likely within the next five years. His team has given him briefs on different options, said Wu, adding that it was not a focus for him for now. “My priority is on building the best team and the best company to take us from here to a hundred times where we are.”
The fund raise, Wu says, “is more about crypto finance being a fast-evolving industry that offers the opportunity for a startup like Amber to go from zero to a billion and beyond in a very short period of time and also offers the opportunity for guys like ourselves who are long term to perform in bull and bear markets across different cycles. And so to me it’s just the beginning.”