The recent $5.6 million injection of capital into New York-based AlphaPoint came from bridge financing, a short-term business loan, the company confirmed to CoinDesk. But AlphaPoint would not say who made the loan or its terms. Bridge financing is often used to cover financial shortfalls.
“We can say that it was led by a new investor whom we cannot disclose with participation from existing investors including Galaxy,” Patrick Shields, head of marketing for AlphaPoint, told CoinDesk.
AlphaPoint, which provides digital asset trading software for cryptocurrency exchanges in various local markets, raised a $15 million venture round in June 2018 led by Galaxy Digital. Half of that amount was subsequently transferred to “a Galaxy managed fund” during the final quarter of 2018. Galaxy took a $3.1 million write-down that remained on the balance sheet in the third quarter of 2019, saying it “was due primarily to the company’s performance being below forecast.”
During the announcement for the 2018 Galaxy round, executives touted the company’s blockchain-based asset issuance capabilities. Galaxy’s Greg Wasserman, who joined AlphaPoint’s board at the time, noted then that “the market opportunity for digitizing illiquid assets is tremendous.”
Several people who spoke to CoinDesk regarding this side of AlphaPoint’s business indicated these blockchain-based issuance efforts, such as a real estate tokenization project, have not been successful.
AlphaPoint’s core business depends on cryptocurrency trading volume, as its revenue model is based on charging customers, mostly small exchanges, monthly licensing plus a cut of trading fees. Volume on established exchanges like Bitstamp dipped lower as 2019 closed, and while recovering, have not seen the same levels since this past summer.
As well, several of AlphaPoint’s flagship customers have gone out of business. For example, Canada-based Einstein…