Helsinki, Finland-based Tesseract is a Fin-FSA regulated diversified financial services and investment management innovator in digital assets. It serves investors, retail trading platforms, custodians, and borrowers of capital globally with novel technology solutions that safeguard client assets and optimise capital efficiency.
Tesseract raises Series A
In a recent development, the asset management firm announced that it has raised $25M (approx €21M) in its Series A round of funding. The round was led by Augmentum Fintech, a London-based venture capital firm that invests in the fintech sector.
Additionally, other venture capital firms who participated in this round include BlackFin Capital Partners, Concentric, DN Capital, Jabre Capital Partners Family Office, LeadBlock Partners, and Sapphire Ventures. Industry participants including Coinbase Ventures, Wintermute, and Woorton have also invested in this oversubscribed round along with undisclosed local and international investors and strategic angels.
Besides, Icebreaker.vc, which made its first investment in Tesseract in 2018, also participated in the round.
Use of the funds
Speaking on the development, Yichen Wu, CEO and Founder of Tesseract, says, “This funding is a significant milestone for Tesseract and one of the largest Series A investments in Finland to date. We are humbled to gain new industry-leading investors in technology, finance, and blockchain whose expertise will add significant value beyond the raised funding. We are extremely happy to see incredible global investor interest in our business in this oversubscribed round.”
Wu says the raised capital will help the company to further develop its institutional offerings, hire new talents to develop new and existing partnerships and to boost innovation in new undisclosed financial products.
Besides, the company will also focus on developing its cross-trading venue margin lending platform, which according to Tesseract, has seen enormous uptake in the past year. Wu adds, “Due to the global nature of our fast-moving business, we will also funnel efforts into spearheading our global growth and ensuring regulatory compliance globally.”
“Redefining digital asset lending”
According to Tesseract, institutional investment in digital assets is increasing, with institutional ownership expected to rise from the current 10 per cent to 30 per cent by 2025. This is where Tesseract looks to operate. The company, as compared to traditional finance, believes that the institutional side of digital asset finance is underdeveloped which gives confidence to the market’s growth expectations. Tesseract bridges institutional capital flows between traditional and digital asset finance.
Founded in 2017, Tesseract is a financial services and investment management innovator in digital assets. It offers solutions in investments, portfolio management, capital markets operations, and blockchain technology. The company manages hundreds of millions in assets for its customers, and is regulated by the Finnish Financial Supervisory Authority, and operates globally.
The Finnish Financial Supervisory Authority (Fin-FSA) is the financial regulatory authority of the Finnish government, responsible for the regulation of financial markets in Finland.
Tesseract’s core products are in margin lending, OTC lending, partnerships with retail trading platforms, and decentralised finance. Its margin lending platform improves capital efficiency for institutional clients ranging from hedge funds to market makers. Global retail trading platform partnerships allow consumer-focused exchanges, custodians, fiat on-ramps, and wallet providers to offer an improved profitability via Tesseract’s white-label solutions.
The company has witnessed a huge growth in the past year with over 20x growth year-on-year and its team size also grew from three to now over 30. It reports that it has been profitable since early 2020, which, according to Yichen Wu, is “incredibly rare for a VC backed company growing this fast.”
Even though based in Helsinki, most of Tesseract’s clients are based in other countries. “As a regulated entity, we work mostly with large international financial organisations. The global nature of digital assets enables us to be a global leader in finance while being in Helsinki. The supportive startup ecosystem, collaborative & understanding regulators, and amazing public infrastructure have contributed to the company’s success tremendously,” adds Wu.
About Augmentum Fintech
The firm invests in fast-growing fintech companies that are disrupting the financial services sector. Augmentum Fintech claims to be the UK’s only publicly listed investment company focusing on the fintech sector in the UK and wider Europe. It was launched on the main market of the London Stock Exchange in 2018, giving businesses access to patient capital and support, and providing public markets investors access to a privately held investment sector during its main period of growth.
Their portfolio companies include Tide, Onfido, ParaFi, Interactive Investor, Grover, and Volt.
Speaking on the investment of Tesseract, Martyn Holman, Partner at Augmentum Fintech, says, “We are witnessing wholesale changes in the infrastructure supporting the crypto space as it evolves to the demands of increasing institutional activity. Following the separation of custody and trading in the first waves of evolution, Tesseract is addressing the next fundamental need in a space that has limited leverage capabilities.”
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