Intercontinental Exchange’s yet-to-be-launched cryptocurrency futures trading platform Bakkt has earned a valuation of more than $740 million according to sources that are privy to the inside negotiations between the proposed platform and its investors. Back in December 2018, the company announced the conclusion of its Series A funding round that saw it raise as much as $182.5 million from leading investors in the blockchain space such as Galaxy Digital, Pantera Capital, and Microsoft.
Starbucks Coffee is also an investor in the platform but reports have revealed that it did not make any capital investments into the project. It is more of a strategic partner to the whole enterprise. According to the latest information, it would seem that Bakkt may have sold close to 25% of its shares to the Series A investors.
The above valuation is a post-money valuation which takes into consideration the amount of capital that an establishment has gained from external investors in addition to the amount of capital that the entity has without the inclusion of the money raised. In this case, the above valuation includes the strategic partnership with the Starbucks coffee giant.
According to the sources cited above, there are concerns about the return on investment from the December funding round considering that the platform is now more than 5 months past the scheduled launch date. Initially expected to launch on December 12th, they had to push the launch date to January 2019 a date that was also abandoned following the lack of regulatory approval. The head of ICE gave an announcement following this postponement and decided not to give a tentative or probable date of the launch of the platform but gave an assurance that it would launch later in the year. These are several months past the scheduled launch date which affects the return date on the investment made by the investors of Series A funding round.
According to one of the sources, “A lot of things will need to line up for investors to receive returns that they would typically expect for a Series A.” One of the things that will have to go right includes the onboarding of several institutional traders that will conduct large amounts of trade volumes. The source said that “from a cash-flow perspective, Bakkt will not be earning much based on their proposed contract fees, so they really need a lot of volume.”
Despite the lack of regulatory approval from the Commodity Futures Trading Commission (CFTC) as of yet, reports show that there is a high chance or likelihood of getting the approval. The institution is working closely with the regulator to ensure that they launch a fully regulated platform.