Xapo raises $20 million in new funding, $40 million overall

Multi-service bitcoin startup Xapo announced in a blog post today that the company has secured an additional $20 million in Series A-1 funding, bringing the total invested in the Palo Alto-based company to $40 million. The investment trumps the previous record of $30 million set by bitcoin-processing giant BitPay earlier this year. Although considered something of a dark horse in the bitcoin world until recently, Xapo is poised to make a game-changing innovation with the introduction of a hot wallet-tied debit card slated for release this month.

The $20 million funding round was led by Greylock Partners and Index Ventures, with smaller investments by PayPal co-founder Max Levchin, Yahoo! co-founder Jerry Yang and Emergence Capital Partners. The new crop of investors join existing backers at Benchmark, Fortress Investment Group, and Ribbit Capital.

In the blog post, Xapo Founder and CEO Wences Casares said: “We are very optimistic about what this represents, not only for Xapo, but also for the bitcoin ecosystem as a whole.”

In a related piece, Greylock Partners VC (and LinkedIn co-founder) Reid Hoffman explained his fund’s motivation for investing in Xapo, citing the creation of “a system where average consumers can be comfortable and secure with holding and using bitcoins.” Hoffman also noted Xapo’s “network of underground vaults” and the forthcoming debit card as major factors in the investment.

According to the Wall Street Journal, the cash injection pushes Xapo’s valuation to roughly $100 million, within sight of the $140 million commonly attributed to bitcoin giant Coinbase. By CoinDesk’s estimate, this also raises the total amount of venture capital investment in bitcoin in the first seven months of 2014 to $147.83 million, nearly double the amount invested in all of 2013.