The firm plans to provide ’a fundamental building block for a rapidly maturing market’

Cryptocurrency platform and Welsh broker Coincover has raised $9.2m in a series A funding round - this will help the firm to grow its team and further invest in its product.  

Leading the funding round was London-based venture capital firm Element Ventures.

Other firms that participated in the funding round included DRW Venture Capital, CMT Digital, Avon Ventures, Valor Equity Partners, FinTech Collective, Susquehanna Private Equity Investments, LLLP, Volt Capital and its founding investors, Insurtech Gateway Fund and The Development Bank of Wales. 

David Janczewski, co-founder and chief executive of Coincover, said: “Crypto can be complex and confusing and people have valid fears around the safety of their funds.

”With Coincover, we are providing a fundamental building block for a rapidly maturing market by ensuring that people can be protected against making a mistake that can end up costing them thousands.  

“This investment means we can rapidly scale our growth to market and consumer demands - and in doing so, ensure more people can invest in crypto safely.” 

Biggest challenge in the market 

Speaking on cryptocurrency, Soona Amhaz, general partner at Volt Capital, said: “One of the biggest challenges in our industry is crypto protection and Coincover is the team to solve it.  

“Coincover is building critical infrastructure to help get users and institutions more comfortable with this new financial paradigm. We’re delighted to support Janczewski and the rest of the Coincover leadership team.” 

Sean Lippel, head of digital assets at FinTech Collective, added: “The private key experience is still too foreign, cumbersome and risky for mainstream crypto users.” 

Typically, cryptocurrency is held within digital wallets that are protected by private keys, or in offline, cold wallets, which could be a paper wallet, USB or hard drive.  

A private key encryption in cryptocurrency is like a password and it allows the user to access and manage their asset.  

However, if a cold wallet is lost, or an investor forgets their private key, access to the digital coins could be lost.  

Coincover estimated that around 20% of all Bitcoin is lost or stranded in wallets that cannot be accessed – this equates to $806bn.  

Crypto wallets can be hacked too, just like currency in a bank account. In 2020 alone, there were 122 hacks on decentralised apps, cryptocurrency exchanges and blockchain wallets, which led to losses of around $3.78bn, noted Coincover.

Lippel continued: “As digital assets look to scale adoption from millions to hundreds of millions of users, the check-the-box deposit and theft cover solution offered by Coincover will be a critical component. 

”We are excited to back such a talented technical team out of the UK with a strategic B2B2C marketing strategy.” 

Coincover’s secure key storage creates offline emergency backup keys for wallets that are fully encrypted - these have zero network exposure to prevent targeting by hackers. 

Furthermore, its deposit protection guarantee also protects customer wallets up to the value of $1m, in case of business failure or a catastrophic systems failure.  

But, as the interest in cryptocurrency grows - with more than 100 million global crypto users so far according to Crypto.com - so does the scale of potential problems.  

More investment  

Michael McFadgen, partner at Element Ventures, highlighted that more people are investing in cryptocurrencies, but the industry needs infrastructure and safeguards to make it more consumer-friendly.  

He said: “People don’t want to be losing their laptops and having millions go missing. Coincover is building the infrastructure that will allow crypto to reach mass adoption, with a fantastic management team that can tackle this problem in a way that no one else can.

”We’re delighted to be supporting Janczewski and the team and can’t wait to be a part of their growth journey.”  

Kim Trautmann, head of DRW Venture Capital, added: “As an early investor in crypto assets, it’s been clear to us that there would be tremendous opportunities for smart, forward-thinking startups to develop products that support the evolution of the ecosystem. 

“Coincover has positioned itself to take the lead in solving one of the most prevalent problems: how to protect wallet access and the funds within them. 

”We’re excited to make this investment and work alongside Coincover’s world-class leadership team to raise additional awareness around these issues.” 

Coincover was founded in May 2018. It aims to build the world’s safety standard for cryptocurrency. It offers the first cryptocurrency theft cover and military-grade technology to recover access to lost funds.  

It uses advanced technology and insurance-backed guarantees to provide disaster recovery and business continuity options for cryptocurrency businesses and enables consumers to enter the cryptocurrency market safely.  

The company’s services ensure that users and businesses never lose access to cryptocurrency funds due to user error, business or infrastructure failure.  

Coincover’s plug-and-play platform combines a policy underwritten by Lloyd’s of London with technology created by specialists across government, military and law enforcement.  

This plug-and-play platform is offered to crypto investment apps and platforms to enable investors to buy and sell more than 200 different coins from different sources while maintaining insurance coverage. 

It gives access to secure backup and the recovery of private keys with government-standard security protocols and an insurance-backed guarantee in the event of theft, fraud, user error and business failure.  

Crypto companies can embed Coincover’s platform into their offering, giving customers peace of mind when they’re investing and trading cryptocurrency.  

BitGo, Curv and Fireblocks are just some of the companies to use Coincover after it launched its product last year following a partnership with Lloyd’s syndicate Atrium.