Circle

/ Startups / By
Circle Founder & CEO Jeremy Allaire Photographer: Jordan Vonderhaar/Bloomberg

This week we’re pouring one out for the impending arrival of a new Boston based public web3 company, Circle, due to trade on public exchanges in the coming months.

**As Circle is likely in or approaching a quiet period, all of the below information comes from public information I’ve cited below. I reached out to a friend at Circle in preparation for this write up and their response was more or less “management has instructed all employees not to engage with ANYONE externally to talk about the IPO”. Fair enough!**

Founders: Jeremy Allaire & Sean Neville
Founding: 2013
Mission: Raise global economic prosperity through the frictionless exchange of value
Employees: 750 & ~12% Local
Workplace: Remote
Stage & Capital Raised: Late Stage & $950M+ Raised
Investors: Accel, Blackrock, Coinbase, Fidelity, General Catalyst, Tiger Global, Goldman Sachs, Marshall Wace
Key Customers: Felix, Goldfinch, Grab, Lemon, Airtm, Nubank, Solana Pay
Glassdoor Rating: 4.1
Valuation (estimated): $3B+ (assuming they sold ~10-15% of the company in the $400M Q2 ‘22 fundraise / 2022 SPAC valuation was $9B)
^ this is a useless number. There is no tangible valuation until the business is sold or goes public. Don’t forget it!

Everything you’re about to read is for informational purposes only, you should not construe any such information or other material as investment or financial advice. And past performance is not a guarantee or predictor of future results.

Circle is a late stage web3 startup determined to build a new internet financial system. Their flagship product is a digital dollar stablecoin – USDC (USD Coin) and EURC (Euro Coin). They are, in their words, “one of the first digital asset-native commercial financial institutions built on public blockchain ecosystems and decentralized finance protocols”.

In January of 2024 it was reported that Circle confidentially filed registration documents with the SEC for an IPO (src) so it feels like perfect timing to highlight them before a likely 2024 public offering and…where’ve you been?!? Crypto is back, baby!

Circle was founded in 2013 by serial entrepreneur Jeremy Allaire & Sean Neville. Jeremy was the former CTO of Macromedia and founder of online video platform Brightcove which went public in 2012. He’s been on the leading edge of digital trends for over 20 years. Jeremy leads Circle as its Chairman & CEO and Sean has since graduated to the Board. 

Circle is in the stablecoin business, facilitating faster payments directly from senders to receivers on a blockchain without third party intermediaries. What’s a stablecoin? A stablecoin pegs its value to an external reference or currency. In Circle’s case today, the US Dollar & Euro, 1:1 (src). Stablecoins are digital versions of currencies built on blockchains that aim to provide superior speed and security, at lower cost & without third parties like banks facilitating the transactions. Stablecoin payments settle more quickly and senders have better visibility into their money movements as transactions process on the blockchain ledger.

To understand the market, there is approximately $140B in stablecoin circulation today (src) with $4T in cash on U.S. corporate balance sheets as of Q3 ‘23 (src). You can imagine there’s a large opportunity to digitize some of that cash onto blockchains so that it can move faster, at lower costs, with higher transparency from senders to receivers than with existing ACH or bank wire transfer infrastructure.

Web3 and cryptocurrency builders have been to the moon, Mom’s basement, and just about everywhere in between over the last few years. The Gartner hype cycle would have us believe that 2022 and 2023 were its trough of disillusionment because, in 2024, it looks like we’re beginning to ascend up the slope of enlightenment propelled by the SEC’s long awaited Bitcoin ETF approval. Crypto (and blockchain technologies) continue to move more mainstream.

A very quick history lesson for all the generalists out there. Following the 2008 Bitcoin whitepaper by its anonymous creator Satoshi Nakamoto, there was a cambrian explosion of cryptocurrencies leveraging variations of the blockchain technology Bitcoin was created upon. Thousands of projects and well known protocols like Ethereum, Solana, Ripple and many more emerged with global developer ecosystems. 

We know what happened next. In November of 2022 the market capitalization of global cryptocurrencies reached a peak of $2.97T before rapidly retracing. Aided by the rise in interest rates and the de-risking of risk assets across technology, crypto institutions began to fail. First Celsius & Voyager, then FTX & BlockFi, and finally Genesis all declared bankruptcy in ~6 months. The total crypto market cap fell over 70% to ~$825B by December of 2022. There was some bad behavior – speculation, scams, and outright fraud – causing regulators to step in.

But that’s all background noise. Because one of the most consistent, transparent, and regulatory forward thinking web3 companies all along is right here in Boston: Circle. They’ve weathered it all, including a 2 day de-pegging of USDC from USD caused by $3.3B in deposits tied up at Silicon Valley Bank before their government rescue, saving all depositors (src).

So here we are in March of 2024 and the global cryptocurrency market cap has risen again to $2.4T, rapidly approaching its previous historical highs. In fact, at the time of this writing, USDC is the second largest stablecoin with $28B+ worth of USDC tokens in circulation. That’s up 3x from $9B circulating in March 2021. 

The team continues to execute on their mission to connect the world more deeply by building a new global economic system on the foundation of the internet where everyone, everywhere can share value as easily as we can today share information, content, and communications on the internet. Ok I took that action packed sentence from their scrapped SPAC document but it’s GREAT!

Circle’s stablecoin is known for its transparency, providing monthly audits of its reserves in regulatory compliance with the SEC. Tether is the largest and oldest stablecoin but it’s important to note that they are not regulated to the same degree, based in the British Virgin Islands, and have not confirmed backing USDT 1:1 with cash and cash equivalents – something F500 corporate treasuries are likely to demand (src). Circle is backed exclusively by cash, cash equivalent and short-duration U.S. Treasuries in custody at leading institutions like BlackRock and BNY Mellon.

USDC is available to use on 15 blockchain networks like Ethereum, Solana, Algorand, Avalanche & more delivering dollar backed financial services across blockchain networks and borders. International firms can hold USDC to preserve cash value and worry less about domestic inflation in their native currencies. USDC is also a great digital cash on-ramp and off-ramp for the blockchain networks cited above and crypto businesses like Coinbase that are still very much secular growth stories. 

Other important parts of the Circle platform include Circle Mint, where enterprises can mint & distribute USDC from their local currencies to transact with near instantaneous settlement at lower cost than managing USD reserves. Their Cross Chain Transfer Protocol product allows USDC to flow securely between blockchains to help boost liquidity cross chain. They also offer Web3 services like Programmable Wallets and a Smart Contract Platform is in beta.

Undoubtedly a lot has changed since their original path to the public markets – a SPAC filing – in November of 2022. When Circle published their first S-4, the main source of revenue was interest income while interest rates were below 1%. Now, with rates above 5%, that’s a pretty big tailwind propelling their business forward to a potential $1B+ revenue run rate (src).

Circle last raised $400M in 2022 from Blackrock, Fidelity, Marshall Wallace LLP and, in August ‘23, Bloomberg reported they generated $779M in 1H 2023 revenue, surpassing $772M in full year 2022 revenue. They also notched $219M in 1H ‘23 EBITDA after $150M in 2022 full year EBITDA. Circle reportedly has $1B in cash on the balance sheet as of June 2023 (src).

The company is hiring across the board, Jeremy was named Best CEO by web3 media publication “The Big Whale”, and I know we’re all eager to see Circle publish the numbers behind this tale of web3 era resilience.

Operators to Know (Locally):

My investigative powers continue to need work so apologies to the Circle team I know I missed many up & coming operators internally

Key Roles To Be Hired:

If I were interviewing here are some questions I’d ask:

  • What are the key markets outside of the US & Europe for Circle in the years ahead?
  • What are the biggest challenges as you scale the team to a public company with a remote workforce?
  • What is the long term vision for the company? What new product(s) are needed to achieve this vision?
  • What are the most important teams you’ll be looking to add to in 2024? How does this align to the existing org structure?

We’re optimizing for readability here so to learn more about Circle you’ll have to D.Y.O.R. I’m excited to watch this team bring more corporate treasuries and businesses into the digital, web3 age. All financial wizards applaud your efforts. See you around town and on the blockchain!

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