The anonymity of Cryptocurrency is one of its biggest selling points. Yet at the same time, the same anonymity prevents mainstream adoption from financial institutions due to Know Your Transaction (KYT) concerns. Bringing this gap isChainalysis, a NYC startup launched in 2014, that allows financial institutions and governments all over the world to conduct cryptocurrency investigation and provides compliance solutions to ensure that regulatory concerns are all addressed. Building trust in the Cryptocurrency markets is the key to widespread adoption and Chainalysis is paving the way.
AlleyWatch interviewed CEO Michael Gronager to learn more about about how Chainalysis is poised to be the leading solution for crypto compliance & investigations, the company’s future plans, and recent round of funding which brings its total funding to $53.6M across five rounds.
Who were your investors and how much did you raise?
Our $36M Series B round was led by Accel, with additional investment from Benchmark, who led our Series A, and strategic investments from Sozo Ventures and MUFG Innovation Partners, two Japan-based financial institutions with expertise in fintech.
Tell us about the product or service that Chainalysis offers.
Chainalysis offers cryptocurrency investigation and compliance solutions to global law enforcement agencies, regulators, and businesses as they work together to fight illicit cryptocurrency activity. Chainalysis Reactor enables users to easily conduct in-depth investigations into the source and provenance of cryptocurrency transactions. Chainalysis KYT provides an automated way to assess money laundering risk so compliance professionals can meet regulatory requirements.
What inspired you to start Chainalysis?
One key challenge for cryptocurrency businesses is difficulty getting bank accounts. I wanted to help solve that problem because doing so would help grow the industry overall.
How is Chainalysis different?
Chainalysis has a unique data advantage. We are the only company that has been systematically collecting information that links real-world entities to blockchain transactions since 2014. We have identified thousands of services and can identify the majority of value moved on public ledgers.
What market does Chainalysis target and how big is it?
Chainalysis works with cryptocurrency businesses, financial institutions, and governments globally.
What are the biggest challenges presently in the widespread adoption of cryptocurrency?
In order for cryptocurrency to achieve mainstream adoption, cryptocurrency businesses and governments need to work with existing financial institutions. This is still a huge challenge for the industry.
What’s your business model?
B2B SaaS
What was the funding process like?
We had great traction due to amazing growth in 2018. We had many potential investors, and we went with the best.
What are the biggest challenges that you faced while raising capital?
Raising our Series B was very different from Raising our Seed and Series A rounds. When we were raising our Seed and Series A rounds, we had to hustle to get as many meetings as possible. This time around it was much easier to get meetings, and the challenge became prioritizing and figuring out who were the best partners for us.
What factors about your business led your investors to write the check?
For this round, our amazing growth, our position as the clear market leader, and investors’ understanding of the need for a product like ours so that financial institutions can work with cryptocurrency businesses all contributed to the successful Series B.
What are the milestones you plan to achieve in the next six months?
We are planning to expand into more cryptocurrencies beyond Bitcoin, focus on growing our global footprint and opening offices in other markets, and investing in research & development.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Never say no to investor meetings. You might need them 6 months from now, and you always want to have a long list of people you can call.
Never say no to investor meetings. You might need them 6 months from now, and you always want to have a long list of people you can call.
Where do you see the company going now over the near term?
We are working on building trust in blockchains among cryptocurrency businesses, financial institutions, and governments / widespread adoption of crypto.
What’s your favorite restaurant in the city?
Futago for Japanese barbecue
