First Coin Capital’s Acquisition Brings the “Goldman Sachs of Crypto” to Canada
The Vancouver-based First Coin Capital has announced that it has been acquired by Galaxy Digital, the biggest move yet towards recognizing Canada as a global leader in the cryptocurrency and blockchain industry. Galaxy Digital is led by former Goldman Sachs partner and current cryptocurrency billionaire Michael Novogratz, and this recent acquisition is part of Novogratz’s goal to build the “Goldman of cryptocurrency” right here in Canada.
The U.S. company Galaxy Digital is full-service digital asset bank, and they bought First Coin Capital, an ICO advisory firm that is less than a year old. First Coin was co-founded by Sean Clark, a major player in Canada’s crypto scene, having also founded Hut 8 and First Block Capital.
First Coin guided clients through the initial coin offering (ICO) process by helping them establish the need for a token, the ability to raise capital, perform token economics, program the token itself and finally help with sales and marketing. The Vancouver company was one of the few firms in the world offering a beginning-to-end ICO process.
“We saw the disruption that was going to occur,” Clark explains. “For companies to be able to create tokens to access capital in the crypto ecosystem through an ICO, it was something we knew would be around for a long time and it was a valuable pillar of the ecosystem. We sought out to create that with First Coin.”
For many in the space, the business model behind First Coin and its success in the country was enough to be excited about. But Clark recognized the importance of the acquisition and the ripple it will send to similar organizations in Canada and abroad.
“Canada is a global leader in blockchain,” says Clark. “This acquisition is probably the first real acquisition of a blockchain company here. There have been smaller ones, but this is the first one that matters. It’s only the beginning.”
The deal fell into place when Clark and another First Coin co-founder Marc Van Der Chijs met Novogratz this past October through the investor, GMP. At that meeting, Novogratz brought up Galaxy Labs, a subset of Galaxy Digital that was doing work similar to First Coin.
Novogratz realized that First Coin was ahead in terms of personnel and tech—thanks in part to First Coin’s other co-founder and CTO Beier Cai, Hootsuite’s former director of engineering—and wanted to make a move. By the end of that first meeting, Clark and Novogratz hashed out a deal that would see Galaxy Digital acquire First Coin then merge with a TSXV-listed company called Bradmer Pharmaceuticals through a reverse takeover (RTO).
“I think all of the meaningful blockchain companies will flock to Canada to list their companies through an RTO on the TSXV,” says Clark. “The capital markets in Canada are open for business for blockchain, and no other capital markets in the world are doing it to this degree.”
The RTO will allow Galaxy Digital to list its shares on the TSXV through the Bradmer shell and become a “best-in-class, full service, institutional-quality merchant banking business in the cryptocurrency and blockchain space,” according to Novogratz himself.
Reshaping the Canadian Cryptocurrency Space
The new company will be called Galaxy Digital Holdings and will look to raise a whopping $200 million through private placements next month, and it’s likely to quickly reach that goal. If one of cryptocurrency’s leading players—Novogratz has over $500 million invested in crypto assets, from bitcoin holdings to stakes in companies like Ripple Labs—sees this much potential in the TSXV-RTO ecosystem, it won’t be long for other companies in the space to take note.
“Canada is putting the flag down as the leader,” says Clark. “Institutions can now invest in quality blockchain companies through quality exchanges like the TSXV and the TSX. It’s truly a unique moment in time. You’ll see 50 blockchain companies go public through the RTO structure in Canada, and that’s a good thing because it accelerates the whole space.”
Since the acquisition of First Coin, Galaxy Digital has made a few other moves, the largest of which is a $325 million joint venture with Block.one to create an EOS.IO Ecosystem fund. This new capital will allow scalable infrastructure to be introduced more widely in the digital asset space through the EOS.IO community.
It can be hard to speculate about the actual worth of digital assets like bitcoin and ethereum, but the fact remains that companies will continue to enter the space and search for capital and institutional investments. The Canadian ecosystem for investments in the sector is friendly, and even if cryptocurrency continues to waiver slightly through both price changes and regulatory hurdles in other countries, companies will search out Canada and the TSXV for investors.
Still, Clark has strong words for companies looking to enter the space without the tech or expertise to back a business model.
“You have to look at the team and the tech, that’s where you know,” he says. “Hut8 and Bitfury, that’s where you know it’s quality. Mike Novogratz and Galaxy Digital, that’s where you know it’s quality. All these other jokers coming out—they’re just taking advantage.”