According to Raghu Yarlagadda, FalconX’s CEO and co-founder, the company is actively assessing various sectors and identifying key players for potential acquisition opportunities.
FalconX is currently valued at $8bn after a 2.5 times revenue increase compared to the previous year. This year’s growth may be attributed to derivatives trading, which saw a threefold increase despite the broader challenges in the crypto market.
He mentioned his plans to take advantage of the wave of consolidation he speculates for 2025, driven by market regulation and institutional investors.
FalconX’s acquisition strategy
Backed by Tiger Global, GIC, and B Capital, with a clientele of 600 institutional customers, FalconX has had a series of financial wins. The firm has come a long way from a $150 million round in 2022. It has reached a valuation of $8 billion while navigating the challenges that have hit the crypto market.
Raghu Yarlagadda stated that the brokerage firm does not take market risk so that they don’t conflict with their client’s trading strategies. He also emphasized that clients demand a reliable market infrastructure provider
In his words, this means FalconX is focused on high-quality acquisitions to generate more value for customers. The firm’s acquisition strategy is also a shift to prioritizing high-performing companies over hyped projects.
Adding high-performing companies to its portfolio could be FalconX’s strategy to position itself as a leader in the current crypto landscape. It could also help it stay ahead of the curve as the market evolves.
The crypto business investment landscape
The crypto industry was dealt huge blows in 2022. The year was marred by high-profile collapses like FTX and TerraUSD. These events shook investors’ confidence and reduced venture capital funding. Investment levels remained in the lurch in 2023 as investors continued to exercise caution.
However, activity picked up in 2024 with companies making moves and acquiring other crypto and web3 firms. For example, asset management firm Matrixport acquired Swiss asset manager AG. Meanwhile, in the infrastructure sector, Alchemy acquired Bware.
FalconX has now joined the bandwagon, capitalizing on its strong financial performance to provide the cushion it needs to expand. The firm is looking for smaller companies specializing in tokenization, data analytics, and infrastructure to expand its institutional offerings.
Events like the FTX crash brought the crypto market under scrutiny. It signified the need for robust regulatory frameworks and bodies across multiple jurisdictions. It also made many investors wary of the industry and its volatility.
Since then, regulatory bodies like the U.S. Securities and Exchange Commission (SEC) have been zealous, sometimes overreaching, in establishing a framework to regulate crypto and thereby, protect investors.