Ripple raised a substantial €430 million last month from some of the biggest names in finance, according to a Bloomberg report. The funding round valued the company at approximately €34 billion, cementing its status as one of the most valuable private crypto companies ever. However, the deal was less straightforward than those impressive figures suggest. The new investors only came on board after securing significant protections.
Major Institutional Interest in XRP #
Participants in the round included Citadel Securities, Fortress Investment Group, Marshall Wace, Galaxy Digital, and Pantera Capital. For some, however, the investment felt less like a stake in Ripple itself and more like an indirect bet on XRP. Their reasoning: a significant portion of Ripple’s value is directly tied to the amount of XRP the company holds.
Internal estimates suggest that at least 90% of Ripple’s value can be traced back to its XRP holdings. As of July, Ripple’s treasury contained over €106 billion worth of XRP. A large portion of this is subject to lockups, meaning the coins are not released to the market immediately but are unlocked according to a set schedule.
This makes Ripple’s valuation heavily dependent on a single token, one that has seen a significant price decline in recent months. Since July, XRP has lost more than 40% of its value. Such volatility is considered too risky by major financial firms to invest in without safeguards. Consequently, they negotiated terms that are uncommon for a high-growth tech company.
For instance, they secured the right to sell their shares back to Ripple after three to four years with a guaranteed 10% annual profit. If Ripple initiates a buyback itself, that return increases to 25% per year.
Additionally, investors received a liquidation preference, giving them priority over earlier shareholders in the event of a sale or bankruptcy. Such arrangements are typical in higher-risk deals.
As XRP Declines, the ETF Market Gains Traction #
While Ripple remains heavily focused on XRP, it is trying to reduce its dependence on the token. Over the past year, the company has acquired several firms, including prime broker Hidden Road (for €1 billion) and GTreasury (for €860 million), aiming to play a broader role in the financial market.
In the short term, however, XRP continues to play a leading role, not just for Ripple but also for investors. U.S. spot XRP ETFs are approaching $1 billion (€860 million) in inflows following weeks of net purchases.