Ripple, a San Francisco-based company that uses cryptocurrency to move money across borders, announced a massive funding round on Thursday that values the company at $10 billion.
The $200 million Series C funding round, which was led by global investment firm Tetragon, could help validate Ripple’s claim that more banks and money transmitters will embrace the cryptocurrency XRP for international transactions.
Ripple controls an enormous reserve of XRP, which is the world’s third most valuable cryptocurrency, and emerged in 2011 as an early competitor to Bitcoin. In recent years, the company has bet its business on persuading financial institutions to use XRP as a “bridge currency” on cross-border transfers.
In an interview, CEO Brad Garlinghouse said Ripple currently has more than 300 customers. He expects Ripple’s customer base to grow 30-40% in 2020, and says transaction volume on the company’s network will increase more than 600%.
The $200 million investment, which was also backed by SBI and Route 66 Ventures, may help Ripple refute skeptics who say its technology is a solution in search of a problem and question why banks should adopt it.
According to Garlinghouse, XRP helps customers free up capital that they would otherwise have to park as reserves in local banks. Ripple’s customers include Moneygram, which Garlinghouse says now uses XRP for 15% of its transfers into Mexico. Ripple purchased a stake in Moneygram last summer.
Garlinghouse says Ripple clients also use significant volumes of XRP to facilitate transfers of Australian dollars and Philippine pesos, and that the company is testing transfers of Brazilian real.
As for the new funding round, Garlinghouse cited a high level of investor interest in Ripple, saying the company did not need the money, though the funds will provide “balance sheet flexibility.” A Ripple spokesperson said its plans for next year include hiring up to 150 new employees and adding overseas offices.
Garlinghouse declined to disclose details of Ripple’s revenues or operating profitability, but said the company is adhering to its core strategy of promoting the adoption of XRP. While Ripple earns money from licensing its money transfer software, its priority is XRP, since widespread adoption of the cryptocurrency would boost its price—and allow the company to profit from selling its reserves.
One unit of XRP is currently selling for around 18 cents and, like other cryptocurrencies, has slumped in the last year.