Outward VC is delighted to announce our investment in Januar’s €6m seed round, alongside our friends at Element Ventures, ByFounders and Angular Ventures.
In 2018, Coinbase, one of the world’s largest crypto exchanges had obtained a bank account with Barclays. It was a rare foray into the crypto economy by a major bank and seemingly signalled the receptiveness of mainstream banking to the crypto economy. A year later, and without any explanation, Barclays pulled out of the relationship, and Coinbase was left with significant operational disruption. This will come as no surprise to anyone that runs a business in the crypto world, and since then many banks have followed the same tune, refusing to serve business customers who accept payment in cryptocurrencies, with a “computer says no” approach.
[Banks refuse] to serve business customers who accept payment in cryptocurrencies, with a “computer says no” approach.
Four years later, incumbent banks are still not ready to support the crypto economy. While the value and usage of digital assets has grown exponentially, incumbent banks have gained little insights into crypto-specific compliance. As a result, most crypto businesses have high start-up costs as they are not able to get onboarded or access much needed financial services. Those that are lucky enough to be banked constantly face the risk of losing their banking relationship(s), much like Coinbase had to endure.
Established crypto businesses often need to work with multiple partners to get the financial services coverage they need, and many crypto companies are also having to collect payments from customers via international transfers – which results in higher operational costs and increased liquidity requirements.
While the value and usage of digital assets has grown exponentially, incumbent banks have gained little insights into crypto-specific compliance.
Europe is the world's biggest cryptocurrency economy, with the continent receiving over $1 trillion in crypto in 2021
Europe is the world’s biggest cryptocurrency economy, with the continent receiving over $1 trillion in crypto in 2021 and countries across Central, Northern and Western Europe accounted for 25% of all global cryptocurrency activity. Januar will be a critical component of the crypto economy by building financial services infrastructure that is both fit for purpose and compliant.
However, it’s not possible to just enter this space and offer a solution without deep regulatory and compliance know-how. Founders Simon, Andreas and Mikael, together with the rest of the talented Januar team bring this expertise to the table alongside a huge amount of credibility in the cryptoasset community. Januar received a ground breaking Payment Service Provider Licence from the Danish Financial Services Authority after a rigorous process. This licence is the first of its kind and allows Januar to occupy a unique position in the European market.
At Outward, we believe that the opportunity is here and now for Januar to provide a valuable service in what remains a green field opportunity across Europe. Januar’s ‘gateway’ model, which is not reliant on building the entire stack from scratch, allows for speed to market whilst allowing the team to focus on the areas that their customers deeply value.
Our view is that the compliance burden will lower encouraging traditional FIs to enter the space, and by that point, Januar will have firmly established itself as the trusted regulatory firewall between the two worlds.