GSR Capital, a China based private equity firm has announced that it has signed a letter of intent to acquire an 18% stake in blockchain startup tZero by investing $270 million, representing the largest investment made in a platform created to trade blockchain-issued assets.
Investment structure
GSR has also confirmed that it will spend another $104.55 million to garner a 10% stake in Overstock, the parent company of tZero. Furthermore, the investment firm has also pledged another $30 million in tZero’s initial coin offering (ICO).
The funding would take the total investment to $404 million, reflecting the valuation of tZero at $1.50 billion, exceeding the $1.07 billion valuation commanded by Overstock.com. Notably, the company’s core product is not yet launched.
All parties involved in the deal have signed independent letters of intent.
GSR Capital’s chairman and founder Sonny Wu revealed that he is planning to scale the platform globally. It is the first investment of GSR Capital in a public blockchain firm. Previously, the investment firm is focused on clean energy and electric vehicles.
Patrick Byrne, executive chairman of tZero and CEO of Overstock.com, said the money would be spent on establishing more tokenized securities exchanges across the world. He also hopes to get tZero’s token listed on all the exchanges.
Speaking on the fund raising process, Byrne said that raising capital in the US has become a tedious task and so they worked with overseas investors. Byrne told Forbes
“US capital is, to be honest, they’re gun shy on this whole blockchain issue… I’m sorry to say the US is not the leading country in the world.”
Hitting hard on the prevailing system, Byrne said that tZero is an outcome of his vision to undo the ‘original sin’ of Wall Street, which is separating a stock’s trade and its settlement. tZero’s tokenized securities are created to facilitate transparent lending of securities in real-time.
His opponents call him the “scourge of Wall Street.” However, it does not trouble him in anyway. Instead, Byrne believes that significant investments in tZero reflect investors’ optimism about his project.
