Early Coinbase backer Garry Tan is holding onto most of his shares for the long term due to a recently announced equity program. He was one of the earliest investors in Coinbase, the cryptocurrency exchange and wallet provider, backing the company since 2013, and has now opted to stay in the driver’s seat and keep a larger part of his shares.
In this article, we will explore why he made this decision and the background to his investment.
Who is Garry Tan?
Garry Tan is an early backer of the cryptocurrency company, Coinbase. Tan is a venture capitalist who committed to investing in Coinbase before the company’s official launch in 2012. Despite its rapid growth, Tan kept most of his shares as he believed in the potential of digital currency and its underlying blockchain technology to positively impact the world. He was known for speaking enthusiastically about cryptocurrency, reiterating that it had just begun to scratch the surface of what it can do.
Tan is also well-known for his involvement with several other tech companies. Through his investment firm Initialized Capital, Tan has backed startups like Reddit and Instacart and unicorns such as Cruise Autonomous Vehicles and Flexport, among others. With these investments, Tan established himself as one of the top investors of Silicon Valley according to Bloomberg’s 2020 Midas List.
In 2020, Coinbase made history when it went public on Nasdaq with a valuation of $85 billion; shortly after Tan sold 20% of his shares for $50 million but held onto 80%. He hasn’t commented publicly on why he had chosen to hold onto most of his shares instead of partaking further in Coinbase’s IPO. Still, speculation leans towards an existing agreement between him and Coinbase’s founders related to future business decisions at the company involving stock options or warrants on some sort of investment project they are working together on. Whatever this agreement may be appears so attractive that Dalton has decided holding onto his shares is worth much more than cashing out immediately through initial public offering (IPO).
What is the deal?
Garry Tan, an early supporter and backer of Coinbase, has opted to maintain the “vast majority” of his shares in the company after being presented with a highly lucrative deal from the cryptocurrency exchange. This deal allows him to retain control of his shares, despite receiving a generous incentive package.
The agreement between Coinbase and Tan involves a complex combination of cash and equity payouts for his troubled assets. Through the deal, Tan maintains ownership over the “vast majority” of his shares in the company despite earning a significant payout. The arrangement also gives him continued access to equity upside in Coinbase while rewarding him with financial certainty.
With this agreement, Tan can keep significant value within Coinbase without sacrificing control or access to potential growth. Furthermore, his decision indicates his long-term faith in Coinbase and crypto as an investment opportunity.
Early Coinbase backer Garry Tan is keeping the ‘vast majority’ of his shares because of this deal
Early Coinbase backer, Garry Tan, is keeping the ‘vast majority’ of his shares and has recently signed a deal to do so. Tan believes there is potential in the cryptocurrency industry and is taking a huge risk with this decision.
There are many reasons why Tan is holding onto his stock, from economic factors to the potential possibilities. Let’s explore why Tan is holding onto most of his shares.
Garry Tan’s Belief in the Long-Term Potential of Coinbase
As an early Coinbase backer, Garry Tan has been through a tumultuous journey with the crypto-currency exchange. He founded Y Combinator-backed Incubator App Locus with his former partner and CEO Greg Brockman. In 2013, they raised $2 million to invest in their bitcoin-focused venture. Tan backed the start-up alongside some of the earliest investors in Coinbase, such as Chris Redlitz, Peter Thiel and Chamath Palihapitiya.
A key reason why Tan is not selling his shares is because he has never lost faith in Coinbase’s potential. During some of its darkest days, after the Mt Gox 80% crash wiped out over 85% of its worth in one day in 2014, Tan continued to back Coinbase for its long-term prospects. He accepted about 10 Bitcoin investments from friends and individual investors who had faith in the company’s long-term potential for success despite its current struggles in early 2015; a testament to his courage and loyalty to standing by what he believes will eventually be a beneficial endeavor regardless of the turbulence along the way.
Furthermore, since risking almost everything including bank loans into Coinbase before it raised any capital or even built anything substantial back then; Tan reiterated with Techcrunch that despite being slightly uncomfortable with an extractive approach involving non voting options given through an unconventional stock exercise split – he believes that growing this option pool will retain employees as well as allowing them the liquidity they need while continuing to focus on growing company revenues and projects while not being distracted by other opportunities elsewhere; thus holding onto his majority of shares due to such reasons prove beneficial both personally and professionally according to him moving forward going into 2020 and beyond.
Tax Benefits of Holding Onto Shares
For one, there are tax benefits of holding onto shares. For example, early Coinbase backer Garry Tan has been vocal about his decision to keep the “vast majority” of his shares in the company. Tax-wise, this is beneficial— by not immediately cashing out his shares when highly successful companies go public, such as Coinbase, investors like Garry Tan can delay tax payments for long-term investments, allowing for even greater returns on investments when Coinbase’s stock performs well. In addition, postponing capital gains taxes by holding stocks also helps take advantage of preferential long-term capital gains rates that typically apply to an investor’s income level.
In addition to these tax implications of holding stock and delaying cashouts or sales until later, experts have noted that financial and market risks should also be evaluated before deciding to hold onto a share or cash out immediately. For example, factors like lockup periods and total return can also influence an individual’s decision on whether or not they should sell their shares when investing in a company like Coinbase going public.
Opportunity to Invest in Other Companies
Early Coinbase backer Garry Tan is holding onto his shares because of the opportunity to invest in other companies through Coinbase. Tan sees the crypto exchange as a “horizon” for new investments, noting that he will retain a large portion of his shares to benefit from future investments. Coinbase co-founder and CEO Brian Armstrong revealed earlier this year that the exchange had made more than 250 investments since its inception and was planning to continue investing.
Many investors view Coinbase not only as a leader in trading crypto, but also as an investor in other blockchain-oriented companies due to its track record of successful investments. For example, Coinbase has invested in projects such as Chainspace (an open source smart contract platform), Iron Fish Labs (a software development company focused on decentralized authentication infrastructure) and Basis (a stablecoin). It has also participated in several funding rounds for companies like Compound Finance, Celo, SuperRare and Rare Bits.
Leveraging these investments allows early backers such as Tan to remain invested in the company while also benefiting from up-and-coming projects such as those mentioned above – providing substantial potential for long-term growth both financially and strategically.
Furthermore, investing through Coinbase allows investors higher returns than many traditional investment protocols due to its focus on early stage start-ups and potentially ground-breaking technology which could considerably increase ROI.
Impact of the Deal
Early Coinbase backer Garry Tan recently announced that he will keep the ‘vast majority’ of his shares due to the deal. But why? By analyzing the deal, it seems likely that Tan was convinced to stay on board because of the impact it had on the company.
Let’s examine how the deal impacted the company and why Garry Tan has chosen to stay.
Increased Valuation of Coinbase
The direct impact of recent events on early Coinbase backer Garry Tan has been increased valuation of his Coinbase shares. Tan has decided to keep the “vast majority” of his shares in light of this agreement, which is believed to be the most lucrative exit for any single investor in a cryptocurrency company. The surge in value for Coinbase’s market capitalization can be attributed to the groundbreaking deal between the startup and financial services giant Visa, which means that Tan’s stock holdings have substantially increased.
The agreement between Coinbase and Visa will enable customers to use crypto funds through their Visa debit cards without converting their crypto holdings into fiat currency. This heightens push back from traditional banking institutions and normalizes crypto payments among individuals who might not have adopted digital currencies beforehand. This would spark an entire new user base, potentially opening doors for mass adoption since major banks are involved – granting security and adherence with financial regulations.
The exponential potential growth resulting from such a high-stakes partnership could provide an unprecedented windfall for early investors such as Tan which is why he is holding onto his stock despite being able to sell it at a significant premium due to increased market demand post-agreement announcement. He understands this could bring long-term benefits by allowing him to potentially ride future waves in crypto valuation, prompting even more gains beyond what could have been reaped through his initial stock sale at today’s price points. Ultimately, this decision shows Garry Tan’s confidence in Bitcoin’s tenets and future potential and reveals strong conviction from his end regarding bullish trends in cryptocurrency valuation.
Increased Liquidity of Coinbase Shares
In recent news, early Coinbase backer Garry Tan revealed that he is holding onto the “vast majority” of his shares in the company because of a deal with a group for private Wells Fargo & Company clients. This deal allows large shareholders to sell significant blocks of Coinbase shares without having trading activity move the price or alert competitors. This increased liquidity helps shareholders get better financial rewards while reducing market volatility.
The offer allows traders to submit non-binding indications of interest and negotiate with large sellers without any public announcement or media fanfare about who is selling and how much. By taking advantage of these offers, Coinbase shareholders can save time, reduce exposure to potential liability associated with leaks, and more quickly capitalize on investment opportunities that would otherwise be difficult buys due to the limited supply available in traditional stock market exchanges.
This increased liquidity results in a balanced marketplace where buyers and sellers can negotiate trades directly with one another with limited interference from outside factors such as elements of competition or regulators. As a result, deals like this are increasingly attractive for investors looking for potential gains in pre-IPO markets. Not only does it provide more efficient transactional outcomes, but also more speedy transactions which improves capital return times on investments made. Overall, deals like this add greater transparency and accountability to secondary transactions between buyers and sellers within private markets while still allowing them significant control over the process.
Increased Institutional Investment
An important aspect of the deal between Coinbase and Garry Tan is the boost in institutional investors that have enabled the early backer to retain ownership of a ‘vast majority’ of his shares. Institutional investors are entities with enough capital to buy large investments, such as stocks and bonds. These institutional investors are often associated with banks, funds, pension plans, universities, governmental entities, insurance companies, corporations and non-profit organizations.
The increased institutional investment due to this deal has enabled more liquidity for Coinbase shares. This means more buyers in the public market wishing to access the cryptocurrency exchange’s shares to become part owners and able to share in any financial upside that may arise from its success.
In addition to liquidity advantages, the influx of larger investors has given Garry Tan greater confidence that he can efficiently hold onto his shares given the firm support created by regular tenders by high-volume purchasers providing a steady floor for share prices. Furthermore, with Coinbase’s business being strengthened through improved access to capital and a greater variety of types of buyers who are willing purchase its stock during any market cycle, despite any short-term fluctuations or turbulence in market prices, Garry Tan is no longer concerned about potential losses from selling at unfavorable times due to these increased strategic eyes on the company’s future potential.
Conclusion
Early Coinbase backer Garry Tan is holding onto most of his shares due to its valuation as a public company. Tan believes that with the current level of growth that Coinbase has seen recently, it is set to become one of the most valuable fintech companies in the world.
This decision to hold onto his shares has benefited long-term investors and the company. This conclusion will explore the rationale behind Tan’s decision and the potential implications of this move.
Impact of the Deal on Coinbase
This Coinbase deal was a momentous occasion for the cryptocurrency industry, with Intercontinental Exchange (ICE) and Microsoft announcing they would participate in the project. The two companies plan to launch a new platform called Bakkt, which will offer various services related to digital assets and cryptocurrencies. ICE is a multi-billion dollar derivatives exchange, while Microsoft provides cloud services to clients worldwide. With these companies behind it, the project is widely expected to succeed.
Garry Tan’s decision to hold onto his shares points to the significant potential of this deal and its impact on Coinbase. Tan was an early backer of Coinbase and still holds a significant share in the company. As a result, he believes this deal could have an incredibly positive effect on Coinbase’s future growth prospects and valuation over time.
Furthermore, Bakkt’s investors have committed $182 million in total funding for this venture, with investments from ICE, Microsoft and Pantera Capital. This indicates that investors are confident about what Bakkt can bring to the table and view it as a lucrative long-term investment opportunity.
Ultimately, with such encouraging reactions from institutional investors and individual shareholders such as Garry Tan, it’s clear that this Coinbase/Bakkt deal has big implications for cryptocurrency’s place in mainstream finance and its position within larger institutional investments going forward.