This Ethereum Competitor Is Worth $5.25 Billion

Ava Labs, the team behind Avalanche (AVAX -1.47%), is sitting on a lot of money for a crypto company. In this Motley Fool Live segment from "The Crypto Show," recorded April 20, Fool.com contributors Jon Quast, Travis Hoium, and Chris MacDonald consider what new projects Ava Labs could be working on. 

Jon Quast: This is a, it's an Ethereum competitor. It's one of these, you know, layer 1 blockchains. Smart contracts is really kind of their thing, their goal. I believe this is the mission statement? I don't know, this is from their website: "Digitize all the world's assets." And so, Ava Labs is the team behind Avalanche -- right now the 10th largest cryptocurrency by market cap, and reportedly just raised $350 million in a new round of private equity funding. And this actually values the company at $5.2 billion. Now I just thought that this would be fun for perspective, right. The S&P 500, the 500 largest profitable U.S.-based companies [Editor's note: The S&P 500 is 500 of the largest US companies, and they are not all profitable.] Right now the smallest market cap of those, that I saw, was IPG Photonics. It's only 3% bigger than the valuation that Ava Labs just got. So I mean, I just wanted to put that into perspective. Obviously private equity valuations and public market valuations are two completely different things, but I just wanted to put it into perspective a little bit -- that 5.25 billion is a big, big valuation. This is a lot. 

And yeah, this is a lot of cash for a crypto company. Again this is reports, this isn't like an official blog post or anything that I saw from Ava Labs. So there's no word what the organization intends to do with these funds. However, I did see that they currently have 30, more than 30 job openings, including things in business development, marketing, and a "web3 Solutions Architect" is how they're putting it. But I don't know, any thoughts from you guys on what Ava Labs might be cooking up? 

Travis Hoium: I don't know what they're cooking up, but I think it's interesting that these companies are kind of raising traditional funding in this way. It seems like there's at least an interest to mature, and, just like a company like Coinbase, probably reach public markets at some point. So we'll see what happens with that. But yeah, this will be interesting to watch to see what they do with all those funds. 

Chris MacDonald: Well you know, that'll pay for some salaries for sure, so I'm sure they'll be able to fill the positions. But I did see at the beginning of March that they're launching a multiverse incentive program. And that was going to be $290 million. So I have a feeling that the $350 million they raised is probably going to go mostly to incentives to build out. So, Avalanche is a really interesting project with their subnets, which allow-- they're basically sub-networks which allow developers to have almost, kind of, like their own dedicated blockchain. That's one of the things that is, that makes Avalanche different. And what they're looking to do is entice developers to build more stuff on their network. So I have a feeling a lot of that's going to go toward incentives at least in the near term.