Crypto asset manager Babel Finance raises $40M Series A from Zoo Capital, Sequoia Capital China, Tiger Global, and others
Three years after its inception, crypto financial service provider Babel Finance is racking up fundings and partnerships from major institutional investors.
Context & Ripple Effects
In mid-2021, Hong Kong's crypto-lending cohort was on a funding tear: weeks after this $40M Series A, Babel Finance followed with an $80M Series B at a $2B valuation, while local rival Amber Group raised a $100M Series B at a $1B valuation in June. The investor list — Zoo Capital, Sequoia Capital China, and Tiger Global — put crossover money behind a balance-sheet business that lends against and manages customer crypto.
The round now reads as the front end of a documented arc: barely a year after the Series B, a [[a:981319|July 2022 proposal deck seeking rescue funding showed Babel had lost 8K BTC and 56K ETH, worth $280M+, proprietary-trading customer funds]].
First-order effects
- Babel gains the institutional capital to scale lending and asset-management books built on customer deposits, with Tiger Global's participation signaling crossover funds treating crypto credit as a mainstream private-market allocation.
Second-order effects
- Rival Amber Group's near-simultaneous $100M raise shows the same investors underwriting competing Hong Kong crypto-balance-sheet startups, pushing the cohort toward aggressive yield offerings to justify unicorn valuations.
Third-order effects
- If the pattern holds — and Babel's own rescue deck suggests it did — deposit-funded prop trading becomes the failure mode of this entire category, and backers like Tiger Global, whose COVID-era pace fueled a wave of fast unicorns later marked down sharply (Superhuman cut 45%, DuckDuckGo 72% by September 2023), absorb write-downs across the board.
The trend: 2021's crossover-funded crypto lending platforms scaled customer deposits into proprietary risk until the market turn exposed the model, forcing rescues, restructurings, and investor write-downs.