GSR capital, a private equity firm based in China has confirmed that it plans to put up a 270 million investment in blockchain startup tZero. In an exclusive with Forbes, a spokesperson for the firm revealed that they had signed letters to kick-start the tZero project which is a subsidiary of e-commerce giant Overstock.com. This exciting project is earth shattering and will mark the biggest ever investment in a blockchain startup. Even bigger though is the projects potential to spur bigger and better things. Apart from just making a 270 million investment in tZero, GSR capital has confirmed intent to buy about 3.1 million shares of overstock.com or about 10% of the US-based e-commerce giant. This grand acquisition will involve about 104 million dollars from GSR capital’s war chest.
A late development has also indicated that GSR capital will also throw in an additional 30 million dollars to help sponsor tZero’s initial coin offering will see the total amount collected rise to about 134 million dollars. The aggregate amount could reach 404 million dollars and would give tZero a total valuation of 1 and a half billion dollars if the deal were to close on December the 15th as scheduled. On a light note, Patrick Byrne, CEO of Overstock.com and executive chairman of tZero likened the investment to a wedding cake. Adding that the three parties involved which are GSR capital, Overstock.com, and tZero had signed independent letters of intent before the deal was sealed. It was also revealed that three new investors from Asia and the Middle East would be announced soon.
Byrne explained the reason why his startup tZero, which he founded in 2015 in order to stop the short-selling of stock that was not borrowed, had struggled to get investors from the United States. Byrne expressed his surprise that his Salt Lake City startup had to look to Beijing for funding because American investors were very averse when it came to the blockchain. The tZero revealed that he planned to use the money raised to help push tokenized securities exchanges all over the world in line with the SEC-licensed US operations. GSR capital chairman, Sonny Wu, also shared Byrne’s global outlook stating plans to scale the platform globally.
This will be GSR’S maiden investment in blockchain having previously made solid investments in clean energy and electric vehicles. Byrne recounted the day he launched his startup in a glamorous event in NASDAQ’s New York headquarters and expressed satisfaction in how fast the startup has grown in just three years. The platform was created to correct what Byrne termed as the “original sin” which is separating the trade of a stock from its settlement. The startup would go about correcting this by tokenizing commodities just as the blockchain does with Bitcoin and help enable real-time and more transparent lending of securities.
The tZero CEO has lamented of a slowdown in progress stating that despite a 30 million investment, only Overstock.com had issued any shares on it. The slow progress was attributed to the 2015 ICO craze that generated about 20 billion for several startups. Competition arrived a bit later in the form of Coinbase. Who bought tZero’s former broker-dealer partner, Keystone Capital Corp. to combat this competition, the firm plans to heavily in extending its scope to real estate offerings and issuance of blockchain based security tokens.