Chinese private equity firm GSR Capital has confirmed it signed a letter of intent to invest USD 270 million in blockchain startup up tZero, making it the largest recorded investment to such a company, according to Forbes.
Atypical investment structure
The USD 270 million investment came with an 18% stake in tZero, a platform for trading blockchain-issued securities, with GSR confirming it will spend another USD 104.55 million for approximately 10% of the platform’s parent company Overstock’s shares. Additionally, the private equity firm has pledged another USD 30 million in tZero’s initial coin offering (ICO).
This funding would bring the aggregate investment past USD 404 million, pushing tZero’s company valuation to USD 1.5 billion, surpassing its parent Overstock.com (USD 1.07 billion) despite the flagship product not even having been launched yet.
Independent letters of intent were configured and signed by all parties to secure the deal.
Sonny Wu, GSR Capital’s chairman and founder, told Forbes that his company has a long-term view on scaling the platform globally. This investment is GSR Capital’s first public blockchain venture, with its previous history focused on electric vehicles and clean energy.
tZero executive chairman and CEO of Overstock.com, Patrick Byrne, said that the money would be used to open more tokenized securities exchanges internationally for uses such as his SEC-licensed US platform. He envisions tZero’s token to be listed on each of these exchanges.
Byrne noted that raising capital from the businesses home in the US was proving challenging, hence they had to look further abroad. He told Forbes, “US capital is, to be honest, they’re gun shy on this whole blockchain issue… I’m sorry to say the US is not the leading country in the world.”
Hitting into US economics harder, Byrne said that he started the venture to undo what he called the ”original sin” of Wall Street – separating the trade of a stock and its settlement. tZero’s tokenized securities are designed to enable real-time, transparent lending of securities.
Such sentiments have led Byrne to be called the ”scourge of Wall Street” by those whose practices he criticizes, but this does not trouble him. Instead, he believes that the significant investments to tZero show that the tides are turning on traditional Wall Street practices.
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