This VC Gave Coinbase Its First Check

Initialized Capital’s Garry Tan first came across Coinbase founder Brian Armstrong when the latter was still at his day job debugging Airbnb.

AccessTimeIconApr 13, 2021 at 6:53 p.m. UTC
Updated May 9, 2023 at 3:18 a.m. UTC

The early days of Coinbase are now the stuff of Silicon Valley legend.

Take for instance the moment when, fresh out of the famous Y Combinator accelerator, Coinbase co-founder Brian Armstrong showed the rapid increase in the price of a cryptocurrency called bitcoin to the head of Initialized Capital.  

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  • Back in early 2013, Initialized chief Garry Tan saw how this new Coinbase app was running out of working capital to handle demand for transactions by around 9 a.m. each morning. The enthusiastic VC agreed to wire $200,000 as a quick fix, and then went off to help raise some more cash. “I was their first check into their seed round at Demo Day,” Tan wrote late last year. 

    Today, the total assets on Coinbase’s platform stand at $223 billion, according to its recent earnings report, a dizzying 150% increase compared to the final quarter of 2020. The large numbers, buoyed by bitcoin’s price surge, are fueling a Wall Street debut on Wednesday that’s expected to value Coinbase at around $100 billion.

    Whatever the valuation, Tan’s early involvement is about to be rewarded handsomely.

    Click the image for CoinDesk's full coverage of the Coinbase public listing.
    Click the image for CoinDesk's full coverage of the Coinbase public listing.


    Tan recalls Armstrong’s product demo, when he sent the investor 0.01 BTC on the first iteration of Coinbase, called BitBank at that time.  

    “It was live and it worked. It just really stood out,” Tan told CoinDesk via email. “When I first heard about crypto on Y Combinator's Hacker News, I thought it was software eating money. When software eats anything, it's a big deal: Airbnb, Uber, etc. I thought it would be an alternative to Visa and international remittance, as a medium of exchange.”

    Instead, as Coinbase put it in a report published in January, “Bitcoin’s primary application is as a store of wealth.” Some $122 billion of that aforementioned $223 billion on Coinbase is from institutions.

    Tan had first come across Armstrong when he was still working at Airbnb. At the time, Armstrong was the number one customer of SiftScience, an anti-fraud startup that Tan had funded. 

    “I heard that the Sift founder Jason Tan and Brian Armstrong were up until 2 a.m. debugging a problem with the software. That's exactly what great engineers do. They're great at the craft,” said Tan.

    VC victory lap

    Garry Tan is part of a close-knit group of Silicon Valley investors who helped kickstart Coinbase, and continue to play a key role in the U.S. crypto industry as a whole.

    As for Tan’s early Coinbase backing, Initialized co-founder Alexis Ohanian (of Reddit fame) also lent a hand.

    “Alexis, [Y Combinator General Partner] Harjeet Taggar, and I all worked on the Coinbase deal, though I was the primary contact at YC and Initialized,” said Tan. “Alexis specifically helped promote Bitcoin and Coinbase and helped to introduce crypto to more press. I definitely helped him buy into the Ethereum presale, which was a powerful moment in crypto.”

    Helping startups scale is a team sport, and Tan acknowledges there are others who should be thanked. This includes a “serious hats off” to Union Square Venture as well as Andreessen Horowitz for seeing the hockey stick, continuing to buy more of the company, and injecting next-level leadership from Katie Haun and Chris Dixon, he said.

    “Special mention goes to Micky Malka at Ribbit Capital for being critical for navigating the realm of regulations, bank relationships, and broad connections,” said Tan. “He's very humble but I know how much work he put in here and it was impressive to see.”

    In hindsight, Tan says he underestimated bitcoin’s role as a durable store of value against a much larger macroeconomic shift: the massive expansion of the world’s money supply.

    “Store of value is of real utility, and, I believe, durable as a super-trend,” said Tan. “We'll see more cycles of boom and bust, I remain bullish on cryptocurrency as a force for decentralization, which is brought ever more to the fore with the unprecedented amount of control big tech giants have over the lives of our citizenry.”


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