Peter Thiel’s Founders Fund is leading a group of investors into funding the merchant services firm BitPay.
BitPay, which offers corporate Bitcoin services, said it had not been looking for funding but the opportunity was too good to turn down.
BitPay founder and CEO Tony Gallippi said: “We raised seed funding in January and February and still had some left so we weren’t looking for money. They approached us, which was a nice surprise because we’d heard that they’d got as far as due diligence with another company in this space. We were really impressed with their experience and energy.”
Gallippi said BitPay would spend the money on hiring more staff and continuing to build the platform. He said any process involving lawyers takes time but it “was not as painful as we feared.”
Asked about yesterday’s action against Dwolla Gallippi said much of the coverage was wrong and once you looked at the actual warrant it was clear it was a very specific problem of non-compliance – “the shell company was not licensed to do what it was doing.”
Apart from ex-PayPal boss Peter Thiel, the fund’s advisers include Napster founder and Facebook adviser Sean Parker along with ex-Google and SpaceX staff.
The terms of the deal were not disclosed but all the existing seed shareholders used their pro rata rights to maintain their ownership percentage in BitPay.
The company was started in May 2011 by two graduates from Georgia Tech. Their aim is to make taking bitcoin payments as easy as credit card transactions for businesses. It takes a set fee of 0.99 per cent on automated transactions.
BitPay claimed 1,900 new merchants signed up in April and it continues to sign up over 100 new customers every day. It is currently processing around $5m of Bitcoin transactions per month.
Joining Founders Fund is ‘Mad Max’ Keiser’s Heisenberg Capital – a London-based fund focussed on Bitcoin investments.
BitPay also hired a key developer yesterday – see our earlier story.
The firm is still hiring – it is currently looking for two node.js developers.
CoinDesk founder Shakil Khan was one of the investors in BitPay’s first seed round earlier this year which raised $510,000.
Others staying in from the previous round include prominent Bitcoin angel investors Jimmy Furland and Barry Silbert from SecondMarket and the Bitcoin Opportunity Fund.
Founders Fund was formed in 2005 by PayPal founder and CEO Peter Thiel along with PayPal’s former CFO Ken Howery and former PayPal VP Luke Nosek.
The fund has over a billion dollars under management. The funds slogan – “We wanted flying cars, instead we got 140 characters.” – reflects its interest in big technological developments whether in biotechnology, energy, transport or AI.
Previous investments include Facebook, Pathway Genomics, SpaceX, Spotify and articificial intelligence company Vicarious Systems.
The news follows last week’s $5m funding for CoinBase from Union Square Ventures.
The official press release is here.
Disclaimer: CoinDesk founder Shakil Khan is an investor in BitPay.
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