Oct 3, 2018

Coinbase's huge valuation could have been even larger

Illustration: Rebecca Zisser/Axios

Cryptocurrency exchange Coinbase made big headlines yesterday, after a Recode report that it's closing in on a $500 million investment led by Tiger Global at an $8 billion valuation.

Why it matters: This means that Coinbase would effectively quintuple its valuation from a round just 14 months ago. It's a huge validation for the company and the broader digital token market. But, as Axios has also learned, Coinbase's valuation increase could have been even larger, but instead was negatively affected by the 2018 price deterioration of cryptocurrencies like bitcoin.

The backdrop: Talk of a new Coinbase funding began in the first half of 2018, with sources telling us that firms like Sequoia Capital expressed interest at an expected valuation in the $6 billion to $8 billion range. But Coinbase wasn't enthusiastic. Not so much because it didn't like the suitors, but because it had an offer from Vy Capital at a $12 billion valuation. There also may have been other superior term sheets.

  • At the same time, cryptocurrency prices were sagging. Bitcoin had experienced a massive drop between January and February, and never recovered. By the end of June, it was 67% off its highs the prior December.
  • "Their performance right now is pretty tightly correlated to the price of bitcoin," an early Coinbase investor explains.

Vy Capital then pulled the offer, leading Coinbase to entertain the price it had earlier rebuffed (this time with Tiger).

  • Sources says that the Tiger deal isn't finalized yet, but they expect it to be soon. The final close could occur later this month or in November.
  • Reps from Coinbase, Vy Capital and Sequoia Capital all either declined or didn't return requests for comment.

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Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 3 a.m. ET: 665,164 — Total deaths: 30,852 — Total recoveries: 140,225.
  2. U.S.: Leads the world in cases. Total confirmed cases as of 3 a.m. ET: 124,665 — Total deaths: 2,191 — Total recoveries: 1,095.
  3. Federal government latest: President Trump announces new travel advisories for New York, New Jersey and Connecticut, but rules out quarantine enforcement. Per the CDC, residents of those states must now "refrain from non-essential domestic travel for 14 days," with the exception of critical infrastructure industry workers.
  4. State updates: Alaska is latest state to issue a stay-at-home order — New York is trying to nearly triple its hospital capacity in less than a month and has moved its presidential primary to June 23. Some Midwestern swing voters who backed Trump's handling of the virus less than two weeks ago are balking at his call for the U.S. to be "opened up" by Easter.
  5. World updates: In Spain, over 1,400 people were confirmed dead between Thursday to Saturday.
  6. 🚀 Space updates: OneWeb filed for bankruptcy amid the novel coronavirus pandemic.
  7. Hollywood: Tom Hanks and Rita Wilson have returned to U.S. after being treated for coronavirus.
  8. What should I do? Answers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk
  9. Other resources: CDC on how to avoid the virus, what to do if you get it.

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The big picture: The number of deaths from COVID-19 in the U.S. surpassed 2,000 on Saturday. The United States leads the world in confirmed coronavirus infections — more than 124,000 by early Sunday. The number of those recovered from the virus in the U.S. passed the 1,000-mark on Saturday evening.

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The big pig picture: President Trump has called the antiviral drug "promising," but the results of six clinical trials on this investigational medicine are still being conducted, so its effectiveness the treatment of the novel coronavirus has yet to be proved. The World Health Organization is involved in the tests.

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