Does the CFO hire say anything about an IPO at Coinbase?

Coinbase is moving to hire a chief financial officer in what would be a big move for the cryptocurrency platform’s growth plans.

It is also raising questions about the company’s potential plans to eventually go public. Adding an experienced, high-powered CFO is often read as a move that a business is eyeing an IPO. But that’s perhaps a less-revealing tea leaf at a financial services company like Coinbase, which could use help fine-tuning its massive, complicated business model.

Coinbase has been in late-stage talks with a number of candidates, according to people close to the company, and hiring a permanent CFO is one of its top priorities this year. Veteran CFO Tim Laehy joined the company last October to serve in the role in an interim capacity, according to his LinkedIn profile, but Laehy is not expected to stay in that role.

Other expected hires include vice presidents to handle communications and corporate development. Together, those additions would help the company manage its massive growth, which has been fueled by the surge of interest in cryptocurrencies late last year.

Coinbase declined to comment. CEO Brian Armstrong wrote a detailed post last year about how to hire senior executives, saying that it typically takes him six to 12 months to close on the right person.

The company is also continuing to fend off late-stage investors who have expressed interest in purchasing existing shares from the company, despite a recent warning from Coinbase to knock it off in a statement issued to Recode last month. Shareholders have been approached over the last few months by people interested in investing in the company at a valuation as low as $2 billion and as a high as $8 billion — a range that shows how volatile, opaque and illiquid the market is for hungry Coinbase investors.

So the company is weighing whether to launch a new financing round that would be mostly intended to allow for some existing investors to cash out as part of a “secondary” transaction, according to people with knowledge of the company’s thinking. The round, if launched, could also have a small “primary” component, in which Coinbase raises more capital, though the company is not wanting for money.

Coinbase doesn’t officially allow secondary trading, so a sanctioned round like this would require the company’s approval. Investors in recent weeks have been negotiating whether to sell shares or buy shares — hopefully with some guidance from the company about what would be a fair share price.

A large secondary transaction would likely weaken the pressure from any existing investors for the company to soon go public so that they can finally profit off their bet. And it would satisfy the swarming investors who want a piece of it.

Coinbase has also been adding independent directors to its board, another move typically done to prepare for an IPO. Facebook’s David Marcus joined the Coinbase board in December.

The company was last valued at $1.6 billion in August — a round that occurred largely before cryptocurrency’s bull run late last year. That round was led by IVP, a late-stage firm that specializes in leading one of a portfolio company’s last private financing rounds before the company sells its shares to the public.


Recode – All Go to Source
Author:

Theodore Schleifer

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