Bakkt lands hefty valuation but questions remain
Intercontinental Exchange’s forthcoming institutional trading platform Bakkt has snagged a $740 million valuation after it raised over $180 million in funding last year.
But anonymous sources told crypto publication The Block that questions remained about the venture’s risk-return ratio, given Bakkt has yet to get the green light to launch and will operate on different terms from traditional platforms.
“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,” a source told The Block. “A lot of things will need to line up for investors to receive returns that they would typically expect for a Series A.”
Earlier this month, we reported that Starbucks had received “significant equity” in Bakkt in return for a commitment to allow in-store Bitcoin-based payments this year.
The coffee giant will initially install Bakkt’s payment software in its US stores, which customers can use to pay with crypto. No actual cryptocurrency will end up processed by the chain, as it will be instantly transferred into fiat.
The amount of equity Starbucks received in the deal is confidential, but sources suggested “it is disproportionately high given they did not actually make a cash investment…There’s high value from having a brand at this level.”