Bitreserve is seeking to raise $10m in capital through a new crowdfunding initiative.
The bitcoin storage platform, started by CNET founder Halsey Minor, has raised $7m so far, with 51 days to go on its crowdfunding campaign.
Minor said the decision to raise a financing through crowdfunding was a "supplement" to other fundraising efforts. He also said it is an attempt to address the limited investment opportunities available to the general public for technology companies like his.
Minor told CoinDesk:
"People should have a right to invest in innovation ... there are so many things that are just fundamentally flawed. It's like the finance system is still medieval."
Series B breakdown
Twenty-four investors are listed as participants in Bitreserve's funding round on CrowdCube, one of two platforms the startup is using for its crowdfunding efforts. CrowdCube is aimed at investors residing in the UK while the other platform, Venovate, targets investors in the US.
Bitreserve is also raising money from institutional investors in addition to crowdsourced funds.
According to Tim Parsa, who was Bitreserve's chief executive but is now its president of global strategy and markets (Minor has now assumed the CEO role), seven institutional investors have put money into the round, with the rest coming from the crowdfunding platforms.
Bitreserve is touted as a way for the masses to hold bitcoin without exposure to bitcoin's volatility against fiat currencies. It also promotes its transparency features, which includes a live accounting of its assets and obligations to its users.
Bitreserve's funding page on CrowdCube. Source: CrowdCube.Focus on developers and API
When the service opened to the general public on 30th October, it had assets of $166,091, according to its 'Real-time Transparency Page'.
At press time, its assets stood at $279,321. The service has "thousands" of users currently, according to Byrne Reese, who heads Bitreserve's product development.
Minor wouldn't reveal the exact user numbers for Bitreserve, but he emphasised the platform's attractiveness to third-party developers. He said about 40 developers were using Bitreserve's API to build their own products and services. These include two cryptocurrency exchanges that are using Bitreserve's platform for its transparency features, he said.
"People don't understand the difference between trading, clearing and custody [of funds] ... The whole thing needs to be transparent and banks have no product for that," Minor said.
First audit scheduled
When Bireserve was in the early stages of testing, Minor outlined a plan for users to hold their bitcoin assets on his platform while using it to perform free conversions to popular fiat currencies like US dollars or Japanese yen. The platform would have merchants connected to it who would accept dollars or yen in their own Bitreserve accounts.
However, the plan to sign up merchants hasn't progressed, Minor said. The firm is focusing its efforts on signing up third-party developers instead, with plans for a Bitreserve developer's conference next year.
"Our goal is to let users hold money in whatever form that is comfortable for them ... [traffic through out API] is what we talk about internally," Minor said.
Bitreserve's current financing effort is a Series B round. The firm has raised $5m in an earlier round, according to Reese. Neither Minor nor Reese would disclose the investors or investment firms that participated in that round.
One of Bitreserve's transparency pledges is to have its assets audited by an external accounting firm every 90 days. Accountants SingerLewak has been appointed to perform the first audit on 31st December, Reese said.
In an earlier interview with CoinDesk, Minor said Bitreserve would eventually invest client funds in various asset classes. Now, he says that moment is a long way off, as the startup seeks to build up a large base of cash to safeguard client funds.
Minor said:
"We need to build up a very large amount of cash that sits on the bottom of the pyramid ... we're less well-known than big companies like Coinbase or Bitstamp. But that gap will close in the next few months. It's a little scary for me, there will always be awkward growing moments, but all of ours will be public – like, really public."
Images via Bitreserve