Coinbase, a Bitcoin Start-Up, Raises $75 Million in Vote of Confidence

Coinbase, one of the most popular Bitcoin wallet providers, announced on Tuesday that it had closed a $75 million financing round, the biggest yet for a virtual currency start-up.

The announcement of the funding, led by DFJ Growth, could not have come at a better time for Bitcoin, whose price has plunged in recent months. Bitcoin proponents will probably seize upon Coinbase’s latest funding round as a vote of confidence in the virtual currency and its underlying technology.

“If we thought there was a huge risk of Bitcoin going away, we obviously wouldn’t have made this investment,” said Barry Schuler, a managing director at DFJ Growth, who led the fund’s investment in Coinbase.

Fred Ehrsam, a co-founder of Coinbase, sounded an equally optimistic tone. “Investors still have a pretty high conviction on Bitcoin despite what the spot price of Bitcoin is doing,” he said. “This really is people putting their money where their mouth is in terms of betting on Bitcoin as a technology trend.”

Coinbase, based in San Francisco, said it had completed its financing round by the middle of December, before the latest shock to Bitcoin’s price. Bitcoin is now trading at about $210, from a peak of roughly $1,200 at the end of 2013.

In total, Coinbase has collected over $105 million in venture capital. Andreessen Horowitz, which led a $25 million investment round in Coinbase in December 2013, also participated in Coinbase’s most recent fund-raising, along with existing investors Union Square Ventures and Ribbit Capital.

With its latest financing round, Coinbase has also received a nod from the established financial sector. New investors in Coinbase include the New York Stock Exchange, the financial services firm USAA and the Spanish bank BBVA. Vikram S. Pandit, a former chief executive of Citigroup, and Thomas H. Glocer, a former chief executive of Thomson Reuters, also invested in the round.

Since its last round of financing in 2013, Coinbase has led the industry in helping merchants, including Dell and Overstock, integrate Bitcoin into their payment systems. It has also extended access to customers in 18 European countries.

Still, Bitcoin is a long way from mainstream adoption. A prolonged price slump has invigorated skeptics, putting Bitcoin supporters on the defensive. And while many investors and virtual currency entrepreneurs have publicly shrugged off the effects — psychological and otherwise — of Bitcoin’s downward spiral, there is nevertheless a sense of anxiety percolating through the industry. Bitcoin miners, for instance, are struggling to pay for the huge amount of electricity required to keep the Bitcoin network running.

As Bitcoin’s price has dropped, prominent Bitcoin enthusiasts have loudly voiced their support for the Bitcoin’s technology, dismissing attention on the decline as unsophisticated and misplaced. In early January, for instance, the venture capitalist Marc Andreessen shared his thoughts on Bitcoin in a series of tweets.

“In the short run, Bitcoin is still highly useful as a transaction and trust network in many use cases even with high volatility,” he wrote. “The price of BTC has very little to do with the level of creativity of thinking that’s going into new Bitcoin apps, or their usefulness.”

For now, Coinbase’s business model appears to rely heavily on people wanting to buy, sell and hold Bitcoin. The company said it was planning to expand to more countries — it hopes to extend access to 30 by the end of the year — and bring on more merchants. It also intends to improve its platform for developers and enhance its mobile technology. Coinbase now hosts 2.1 million consumer wallets, up from 600,000 at the end of 2013. The company said 38,000 merchants use its payments tools.

But Coinbase’s ties to Bitcoin as a currency, which so far have been its most accessible use case, is part of its appeal, Mr. Schuler of DFJ Growth said.

“You have to have a feel for how to engage consumers,” he said. “That’s the real spark you see with these guys.”