New Investment: Tesseract
Tesseract Raises $25 million in Series A Funding to Strengthen Institutional Digital Asset Lending Offering
Heavily oversubscribed round is led by Augmentum Fintech, with participation from other high-profile investors. Tesseract provides digital asset lending solutions to institutional clients, such as hedge funds and retail trading platforms, globally.
Tesseract, the leading institutional digital asset lending company in Europe and emerging markets, has raised USD 25 million in its Series A funding round. The first funding round in Europe focusing on the sector is led by Augmentum Fintech, a London-based leader in FinTech investments. Other participants in the round include global venture capital firms BlackFin Capital Partners, Concentric, DN Capital, Jabre Capital Partners Family Office, LeadBlock Partners, and Sapphire Ventures. Industry participants Coinbase Ventures, Wintermute, and Woorton also subscribed to the round along with undisclosed local and international investors and strategic angels. Icebreaker.vc, which made its first investment in Tesseract in 2018, also participated in the round.
Tesseract bridges institutional capital flows between traditional and digital asset finance. Tesseract’s core products are in margin lending, OTC lending, partnerships with retail trading platforms, and decentralised finance. Tesseract’s one-of-a-kind margin lending platform improves capital efficiency for institutional clients ranging from hedge funds to market makers. Global retail trading platform partnerships allow consumer focused exchanges, custodians, fiat on-ramps, and wallet providers to gain a competitive edge and improved profitability via Tesseract’s white-label solutions.
Yichen Wu, CEO and founder of Tesseract, said, “This funding is a significant milestone for Tesseract and one of the largest Series A investments in Finland to date. We are humbled to gain new industry-leading investors in technology, finance, and blockchain whose expertise will add significant value beyond the raised funding. We are extremely happy to see incredible global investor interest in our business in this oversubscribed round.”
“The funding will be aimed towards developing our industry-leading institutional offerings even further, hiring new talent to develop new and existing partnerships, and to boost innovation in new undisclosed financial products. We will also focus on developing our cross-trading venue margin lending platform, which has seen enormous uptake in the past year. Due to the global nature of our fast-moving business, we will also funnel efforts into spearheading our global growth and ensuring regulatory compliance globally.”
Institutional investment in digital assets is quickly increasing, with institutional ownership forecast to rise from 10% today to 30% by 2025. Compared to traditional finance, the institutional side of digital asset finance is extremely underdeveloped, giving credence to the market’s growth expectations. Tesseract has experienced explosive growth over the past year with over 20x growth year on year and team size growing from three to over twenty. The Helsinki -based digital asset lender has been profitable since early 2020, which, according to Mr. Wu is “incredibly rare for a VC backed company growing this fast.”
Augmentum Fintech, the lead investor, has recognised the potential of the growing market and Tesseract’s unique positioning. Martyn Holman, Partner at Augmentum Fintech, commented on the investment: “We are witnessing wholesale changes in the infrastructure supporting the crypto space as it evolves to the demands of increasing institutional activity. Following the separation of custody and trading in the first waves of evolution, Tesseract is addressing the next fundamental need in a space that has limited leverage capabilities. Yichen, Ilkka and their exceptional team have already grown a strong and profitable foundation with an outstanding product, a clear vision and a voracious will to win. We are all very excited to be joining them on this journey.”
Even though based in Helsinki, Finland, most of the company’s clients are based in other countries. “As a regulated entity, we work mostly with large international financial organisations. The global nature of digital assets enables us to be a global leader in finance while being in Helsinki. The supportive start-up ecosystem, collaborative & understanding regulators, and amazing public infrastructure have contributed to the company’s success tremendously”, comments Mr. Wu.
Tesseract is a diversified financial services and investment management innovator in digital assets, powered by world-class technology. Founded in 2017, Tesseract is a forerunner in the ever-evolving digital asset sector and has multi-disciplinary expertise in providing industry-leading solutions in investments, portfolio management, capital markets operations, and blockchain technology. A high-growth, cash-flow positive operation, Tesseract manages hundreds of millions in assets for its customers, is regulated by the Finnish Financial Supervisory Authority, and operates globally.
Concentric Investor Comments:
“We will increasingly see digital assets appear on the balance sheet of institutional investors, and that will bring huge demand to use those as collateral to obtain fiat currency,” comments Alexander Mann, Principal at Concentric. “The sector looks set to grow by as much as five-fold over the next few years and Tesseract is perfectly positioned to capitalize on this demand, acting as the plumbing between borrowers and lenders. We have been hugely impressed by the energy and ambition of the management team and look forward to supporting them as they play a leading role in facilitating the crypto revolution.”