Bitcoin has led to the creation of new-age startup, the ones that are involved in digital currency and blockchain technology based products and services. The number of startups on this segment is increasing exponentially over time and the same is applicable for the investments as well. Gradually, the number of investments towards the sector has also increased in terms of frequency and ticket size. There are few bitcoin based companies that have gone to the IPO stage as well.
As the segment get crowded, the competition becomes harder leading to the creation of a challenging atmosphere for startups when it comes to fund raising and capturing a market share leading to an increase in the failure rate of these startups. Even those companies that have gone public are not safe. BTCS Inc., A bitcoin mining company is one such example. However, not all companies will be as lucky as BTCS Inc., a publicly traded company that managed to pick itself up from the brink of bankruptcy after it miraculously received $1.4 million from Cavalry Fund LP and others as part of the post-IPO equity round.
The funding has come at the right time for BTCS Inc., a month after its Securities and Exchange Commission (SEC) filing showed the company in deep red with virtually no money. The report showed that BTCS Inc. had been continuously in a loss-making spree from the past two years. The company had reported a net loss of $8.4 million year-to-date as on September 30, 2015 which was close to $2 million more than its reported loss for the same period last year which stood for $6.6 million.
BTCS Inc. is also reported to have signed a merger agreement with Spondoolies-Tech, an Israeli bitcoin mining hardware provider. According to reports, BTCS Inc. will be using almost half of the funds raised to invest in Spondoolies-Tech, increasing its stake in the company. It is surprising to see the company managing to raise so much even after reporting huge consecutive loss for two straight years. Whether the new infusion of funds at a difficult time will change the course of the company for good is yet to be seen.