Chainalysis remains one of the top providers of blockchain data and forensic tools. Its services have been used by businesses, exchanges, investors, and government officials. As the project continues to expand its user base and features, demand for pre-IPO shares has risen sharply. Here’s a look at the risks, rewards, and steps required to acquire pre-IPO shares of Chainalysis.
What is Chainalysis?
Chainalysis was launched in 2014 as a blockchain data provider. The NY-based firm was founded by Michael Gronager, Jan Møller, and Jonathan Levin to provide more transparency to the budding blockchain sector. At the time, blockchain assets were thought by many to be anonymous, sparking a demand for forensics by law enforcement and government officials.
Today, Chainalysis is the largest blockchain forensic data provider. The platform provides third parties with direct insight into trends, account activity, potential illicit acts, market opportunities, and more. As such, it’s a crucial component of multiple organizations today.
Demand for Chainalysis services has continued to rise alongside blockchain market expansion. It has played a critical role in helping companies determine trends and new opportunities. Additionally, the company has been instrumental in introducing standard audit practices to the blockchain sector.
Chainalysis has a lot of support from government agencies, and it is used as a primary way to research crypto transactions, hacks, potential scams, frauds, and illicit activity. Aside from tracking and revealing illicit activities, Chainalysis tools help law enforcement recover stolen funds. Here are just some of the government agencies that use Chainalysis:
- US Federal Bureau of Investigation (FBI),
- United States Federal Reserve
- Drug Enforcement Administration (DEA),
- Internal Revenue Service (IRS) Criminal Investigation,
- US Treasury’s Financial Crimes Enforcement Network (FinCEN)
- UK’s National Crime Agency.
- South Korean National Intelligence Service.
Historical Funding Rounds
Summary of Chainalysis Funding Rounds
- Total Funding: Chainalysis secured $538M across 10 funding rounds
- Largest Round: The largest round for Chainalysis was a Series F funding campaign launched in May 2022 that raised $170M
- Investors: Chainalysis has received funding from 43 investors, including 42 institutional and 1 angel
- Latest round: The last series F funding occurred on May 10, 2022, securing $170M to further operations.
Funding Rounds Breakdown
- 2 Seed Rounds
- 4 Early-Stage Rounds
- 4 Late-Stage Rounds
Key Investors:
Several high-level VCs participated in Chainalysis funding rounds. Some notable participants included Accel, Benchmark, and Rabbit Capital.
Funding data is sourced from Tracxn.
Why Invest in Chainalysis?
There are many reasons why investing in Chainalysis makes sense. For one, the company is ranked #1 among 211 competitors. Additionally, it’s positioned as the primary option in a market set to experience massive growth over the next decade. As such, its services are in high demand and will only see increased usage as time progresses.
Chainalysis continually enhances its blockchain analysis capabilities, which has helped the firm remain the market leader. As a pioneer in the blockchain forensics industry, the company has received multiple accolades for its commitment to excellence. These rewards include Fast Company’s Top 10 Most Innovative Joint Ventures (2022)Awards and more.
Investors are drawn to Chainalysis due to:
New Level of Trackability
The use of cryptocurrencies is on the rise, and this growth has led to strong demand for tracking services. There are now entire law enforcement departments dedicated to unraveling the tangled web of blockchain transactions when they are associated with fraud or other illicit activities. Chinanalysis provides accurate and precise tools that allow these groups to investigate fraud, money laundering, and other potential high-risk scenarios.
Dependence on Web3 Data Rising
The Web3 economy is set to achieve record growth in the coming years, and Chainalysis is positioned perfectly to provide the data needed to fuel this digital revolution. New businesses will rely on Chainalysis to collect timely blockchain data, enabling them to make informed decisions.
First Mover Advantage
Chainalysis has been the core blockchain research option since the cryptomarket’s early days. The company has grown alongside the blockchain space and witnessed its evolution from basic cryptocurrencies like Bitcoin to advanced multi-network, gen-4, and DeFi options. As such, it’s the logical solution for those seeking detailed data from a reputable source.
Critical Component of the Market.
Thousands of organizations and projects rely on Chainalysis data to operate. These companies turn to the firm for market insight into trends, new technology, and other vital components to help structure their business models. As the demand for these market insights increases, so will the demand for Chainalysis services.
Compliance Concerns
When entering the blockchain sector, new companies will require compliance consulting. Chainalysis provides these services on an international scale, making it the ideal option for firms looking to launch crypto services, tokens, and products globally.
How to Buy Chainalysis Pre-IPO Shares.
There has been no indication that Chainalysis seeks to go public with its operations anytime soon. However, if the company does make the step, there is sure to be a lot of demand for pre-IPO shares, which have a lower valuation, opening the door for higher ROIs. Notably, pre-IPO shares exist before the company goes public. They are often offered to employees, insiders, seed investors, and executives.
1. Pre-IPO Secondary Marketplace
To access pre-IPO shares without having direct access to an employee as a friend, one must use the secondary markets. Secondary markets provide pre-IPO access to accredited investors only. An accredited investor is a trader who can show a minimum of $1M in liquid assets. These requirements can change depending on the project and shares.
Linqto is a prime example of a secondary market that connects accredited investors with pre-IPO shareholders. The firm has helped thousands of investors gain access to high-growth private companies, including Robinhood, Coinbase, and SoFi. Use Linqto to access exclusive opportunities and enjoy lower entry requirements than competitors.
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2. Private Equity Sales
Venture capital firms will work with accredited investors when they meet their minimum investment requirements. You will need to be a high net-worth individual, and your investment will be significantly higher than that of other options. Notably, this option often includes long-term commitments that require you to hold the shares until the IPO.
3. Employee Equity Sales
Employee equity sales are another way you can get your hands on some pre-IPO shares. Notably, companies often provide employees with shares as part of their compensation packages. Using brokers, you can access these investments and purchase them directly from the holder.
Risk of Buying Pre-IPO Shares
There are several risks that you should take into consideration before investing in pre-IPO shares. For one, these shares have far less liquidity than post-IPO options. In many instances, you can’t sell your shares until the firm goes public. As such, it could be years before you retrieve your liquidity from this investment.
Valuations Change
Another consideration is that company valuations can alter drastically over the years based on their actions, products, and markets. You must consider that a company’s current valuation could lose or gain value before its official IPO.
Valuation of Chainalysis and Future IPO
Currently, Chananalysis has a valuation of $8.6B, over double its last evaluation ($4.2b), conducted in June 2021. Since its launch, demand for Chainalysis tools has risen. Today, the project employs +900 professionals and has additional offices in Dubai. Its commitment to providing transparency to the blockchain space includes publishing insightful data, including its yearly Crypto Crime Report.
As governments are now turning to blockchain solutions to supplement their fiat currencies, demand for Chainalysis services will surely skyrocket. Additionally, the increase in other sectors of the market like the Play-to-Earn and DeFi sectors will drive demand further. As such, Chainalysis will remain a critical component of the market moving forward.
If Chainalysis were to go public, the IPO would see significant participation from a variety of investors globally. Those who were lucky enough to get pre-IPO shares would have the most to gain from the maneuver, as they would enjoy the largest profit margins.
Conclusion
Investing in Chainalysis opens the door for future returns. As with any investment, there are risks to be considered. Chainalysis offers proprietary tools and services that make it stand out amongst the competition. Additionally, as the first and premier blockchain forensic firm, it holds a vital role as a pioneering force within the industry. All of these factors make Chainalysis worth watching.
Disclaimer: This article is for informational purposes only and does not constitute financial, legal, or investment advice. Pre-IPO shares are typically available only to accredited investors and carry significant risk. Always perform thorough due diligence and consult with a financial advisor or legal expert before making any investment decisions.
