The crypto exchange Kraken was one of the first trading platforms for bitcoin in 2011. After Coinbase, the exchange handles the second highest volume in the US market. Like its competitor, Kraken is now planning an initial public offering (IPO), preceded by a funding round.
Kraken has received inquiries from potential investors amid the ongoing crypto rally, according to an insider who spoke to Bloomberg. The company is now considering a final funding round that could raise more than $100 million. After securing this target, Kraken would pursue an IPO. Considering Robinhood's $200 million acquisition of European crypto exchange Bitstamp, the plan could be a successful one.
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Pre-IPO funding of $100 million
The funds would be raised in a "pre-IPO round" - a private funding round before the actual IPO. This fundraising could be completed by the end of the year, according to one of the insiders. For the actual IPO, Kraken is looking for a significant partner company to join the board and help structure the IPO. However, nothing concrete has been put on paper yet.
Kraken has been considering an IPO since 2021. In April of that year, Coinbase became the first crypto exchange to go public, with a valuation of $100 billion. Kraken's IPO plans have been delayed due to the subsequent downturn in the crypto market and multiple legal battles with the U.S. Securities and Exchange Commission (SEC). Competitor Coinbase is facing similar litigations for allegedly offering unlicensed securities related to cryptocurrencies.
Another multi-billion dollar IPO?
If Kraken's IPO is successful, the exchange could become one of the most highly valued crypto companies. Currently, the trading platform is privately held and does not release revenue figures. In addition, Kraken has only raised $129 million in venture capital since 2011 - five times less than its publicly traded U.S. competitor. However, according to insiders Kraken is expected to generate between $1 billion and $2 billion in revenue this year.
Analysts estimate that Coinbase will generate around $6 billion in revenue by 2024. The market currently values the largest US exchange at nearly $60 billion. Using a similar revenue multiple of around ten, which is not uncommon in the tech sector, Kraken could go public at a valuation of up to $20 billion. The exchange has not yet publicly confirmed these plans.
