The Next Crypto Companies To IPO

Transcript

I think that is people's perspective. I'm not sure that I'd buy into that perspective and if the the IPO market is definitely open. Coreweave has done really well. We're seeing a lot more of the traditional fintex come back to to the market who had previously shelved. Obviously, Circle is incredible. Um I expect a lot more people to try to IPO more broadly. This is not a crypto specific point. And to your point, you know, there is the Fireblocks who who's been, you know, wanting or thinking about an IPO for a long period of time, but you know, relative to what, you know, if you went and talk to somebody at Goldman, what they would tell you is ideal profile for a public company, they Fireblocks is not there, right? And that's true of chain analysis, which is a great SAS business. That's true of most of the other people we talked

about. Kraken is a different story. And, you know, I expect we'll see them public. Maybe not this year, uh, but maybe next year because of, but you know, I'm sure that's a moving target. And and I think some of the exchanges are maybe different stories and some of the brokerages because they scale with the market really quickly. But for the the other guys, they might force themselves public. And I actually I expect that we'll have a number of less than ideal people that we're not even talking about who would just say I need liquidity. And like what do you mean force themselves public? like like spa or something like that or or they might spack or or they might you know talking to their underwriter and the underwriter is like listen I don't know if there's you know a lot of demand for your business but like we can get you public

we can do direct listing or we'll just have like a you know we'll raise a hundred or $200 million instead of the billion dollars that Circle raised in the IPO. I expect we'll see a number of those. Um because again like I'm not sure that this Circle story is transferable to the rest of crypto. That's fair. And one of the things that ends up happening is for you to be public. One of the things that you want and actually this was very clear with Exodus. So Exodus is uh actually maybe a good example because it's a crypto company that has a wallet that went public and I think the story there is I think it sits at $800 million market cap. It was just over a billion but it had what 50 to $80 million run rate. So clearly under $500 million. And then it's interesting because the price sort

of languished post IPO until they actually got covered by analyst. And then after the analysts things start picking up a little bit and so it's just are you included in the category by the analysts of crypto companies that you can get exposure to. I think it's a little bit of that story and are you going to be covered by the analysts and are you interested enough and it turns out if you have under a billion dollars of market cap and really three which is where the $300 million like 10x just call it a 10x multiple that's where the the $300 million $500 million comes from right you know like3 to5 billion valuation if you're much lower than that analysts are not going to take their time to cover you and if analysts are not covering you then people aren't really the large institutionals aren't really going to deploy capital which

means that there's very limited liquidity and then the the price may languish and things you're not you're just not getting the price that you deserve So exist wallet now maybe is a good example of what it actually looks like for you to have a subscale IPO which you know it wasn't a terribly amazing success but it wasn't a failure either and so I don't know maybe that can be emulated but I think the question is if you want to go the traditional route will the underwriters um actually like take you out and maybe this um this multiple on circle um and I agree with Rob is not the same thing but maybe will kind of like weten their appetite. I would say that there's three categories of companies that would be next. Number one, something that already has an equivalent in terms of trading to a

public market and has scale. So, Kraken, a great example. We already know how Coinbase works in terms of trading multiples. The second one would be things that actually have recurring revenue and you know look a lot more like a SAS product. So, a Fireblocks, a chain analysis, recurring revenue, attach rates, churn, you can sort of measure these things and it's not really dependent on the market. Then the third one are actually businesses that are highly dependent on the on the price of of Bitcoin and on the price of cryptocurrencies um which you have variable revenue and you really don't want that amount of volatility and not to have been diversified before you go public because otherwise you're just going to be uh strictly correlated to Bitcoin. Nobody's going to give you the value that that that you deserve and they're just like you're buy volatility,

right? You're just a Bitcoin tracker uh publicly listed and you don't really want that. Uh you don't want to be CEO of publicly traded company that only has like direct exposure to the market volatility. Yeah. Do can you take us into like the board meetings of Anchorage right now and uh divulge everything? No. And can you uh and tell us everything that happens in them? No. Can you tell us like in in the room because this must be a conversation. It's like look we're maybe a little small to IPO but we've got a phenomenal business. Um like great customer set. Do you start making acquisitions right now? Do you wait until the next cycle IPO? Are cycles dead? Are you waiting till 27? do you go raise a late stage like how do you make a decision like this? So for Anchorage is very different. I think Anchorage I

think we all know that it has this long-term um goal of being public. The only thing what we sell at the end of the day is trust. That's why we're the first and still only fedally charted bank in the US that does crypto custody etc. But the only thing that is more trusted than a federal bank is a publicly traded federal bank right and so the path to trust adds a lot of value to the business and I think that is the path that we're on. it's always been the path that we wanted to be on. Um and and so that that that to us is slightly different than another company that made state private for much much longer because we do have a goal and that just benefits the business in general in terms of trust which is what we sell. Um you know to a lot another reason why

Anchorage is potentially a great candidate is also being a bank means that we already have all of your financials in order. You already have stuff that is audited. You already do reporting. You already do a lot of the heavy lifting that is necessary for you to go public. um you know you know I was at Square when we were preparing to go public and through um you know the IPO and how how crazy that setup was and you know it's intense but getting a bank charter is also very intense. So maybe in that in that sense we're also also further ahead. But the questions still maintain which was are what uh you know John and um the Collison brothers um kind of like talk about about publicly which is why what do we have to to gain?

And if you have a an amazing balance sheet um you have more money um than than you need. You are growing uh you are diversifying your business model. you are becoming more and more attractive each month that goes by and you can do all the partnerships and you're really like leading the pack on all the areas that you want to lead. you know what is the what what is this going to really get you like what is having access to the public markets really going to get you like do you want to issue debt do you want to have some strategy that the capital markets are required for that and then at the end of the day the answer is no there is no specific strategy there and yes the trust would be amazing um but you know it's something that we're walking towards and making sure we're ready for

and think about optionality we want to be in a situation where if we think it's the right thing at that moment we're ready and we can immediately do it uh but not something that is kind of like a big mandate that we must do it. It's it's how we think about it and how the conversations go. Yeah. And by the way, the other thing is that obviously as part of our board, there's venture investors, Mr. Investors like Wicked and so there's always like nobody's pushing us, but you know, there's a little bit of like Anchorage, it would be great to see this publicly listed. But like isn't there also the benefit like for your business, you talk about trust. There is more trust if you're a public company. That is exactly right. And that is one of the biggest benefits uh for Anchorage and one of the biggest reasons why that

would be good for us. But that doesn't apply to the general crypto company on its own. I mean, it does, but specifically for our business, trust is really the thing that that that we sell. [Music]