Behind the Term Sheet: Ledger is France’s Newest Billion Dollar Company Securing Digital Assets in Tomorrow’s Tokenized World

June 10, 2021

Today marks an exciting milestone for many in the burgeoning French tech landscape as Ledger — the leading secure gateway for digital assets, joins the highly coveted billion-dollar company club bringing the country’s unicorn count to 20 and joining the ranks of Alan, Doctolib and Meero among others. With its $380M Series C led by 10T and backed by existing French investors including us at Cathay Innovation, Groupe Arnault and some of our strategic investors, the latest financing values our early-backed Ledger at over $1.5B — reflecting its rapid and accelerating growth.

With the world on the verge of becoming tokenized in the next 15 years, Ledger is already positioned strongly in the decentralized finance field by securing an estimated 15% of all cryptocurrency assets globally. We believe the company has unique potential to capitalize on the hypergrowth of digital assets and become a French founded, trusted global category leader. As a descendant of Gemplus, the inventor and global leader in securing payment cards, Ledger’s momentum is yet another validation of the exceptional entrepreneurial and engineering talent and know-how that can thrive in France.

While this valuation is certainly an achievement — the milestone is exactly that — just one significant step (the first of many) in Ledger’s journey in becoming the easiest and most trusted way to confidently and securely buy, sell, swap, borrow and lend digital assets. You’ll likely recognize Ledger from its wildly popular hardware wallet for cryptocurrency assets but the company also offers a user friendly and secure cryptocurrency management platform (Ledger Live) and the leading digital assets security solution for financial institutions (Ledger Enterprise Solutions).

Today, we’re still seeing major market fluctuations, both in terms of bitcoin value as well as state-level responses to cryptocurrency adoption. For example, while China has banned financial institutions and payment companies from providing crypto-related transaction services, many emerging countries are taking steps to make a more extensive use of bitcoin and cryptocurrency from Africa to Southeast Asia and Latin America.

As the market continues to be in flux, and at a time when we’re witnessing many of the highly-anticipated trends begin to take form, we’d like to take a moment to reflect on Ledger’s journey — going from an emerging startup in a volatile industry to France’s next billion-dollar company.

The Cathay & Ledger Journey — A crypto story.

At Cathay Innovation, we first invested early in Ledger, at a time when crypto was a very early field with many believing it to be a pipedream and the technology being seen as highly unlikely to reach mainstream. Nevertheless, following our investment, we started to see the value of bitcoin rise, climbing its way to approximately $20K Euros in December 2017. This naturally fostered growth for Ledger, who created the most secure way to manage crypto assets through its technology, combining both hardware and software.

Indeed, since day one, Ledger has always been focused on developing a hardware wallet that provides the highest level of security for crypto assets. All of Ledger’s products combine a secure element and a proprietary operating system designed specifically to protect digital assets, with Ledger hardware wallets empowering users with the ownership and control of private keys. This is a key differentiator among the market of software wallets or portals for purchasing crypto, which has proved vulnerable to cyberattacks and hackers that can cause users to lose access to their properties.

However, Ledger’s success story was far from linear. Many mistakenly see IPO-bound breakout startups and believe the trajectory to be straightforward. On the contrary — startup success is always stop and go. While Ledger was on the rise, hiring, opening new offices and factories, ordering an abundance of supply in advance — the market suddenly crashed In 2018 with bitcoin value dropping to around $3K. Overnight, Ledger’s status went from startup “darling” of the new trend, to a challenging year.

But Ledger far from failed. In fact, the company’s leadership team, led by Chairman and CEO Pascal Gauthier managed the downturn extremely well with the support of founder Eric Larchevêque — showing focus and their capacity to take the appropriate measures , refining the mission of the company.

When unfamiliar with the stop and go periods of startups — some overweight the buzz. At Cathay Innovation, when we back startups — we are fully invested in not just the company, but in the people behind it and the idea and vision driving them to make it a reality. That’s why we published in France, during the worst time of the cryptos downturn, this Le Monde article three years back re-affirming our belief in the prospects of a more decentralized internet — a future where Ledger could play an interesting role. And that’s why today, I’m especially proud of our team for standing still with the Ledger team to work through “the stops” so we could accelerate further when the light eventually turned green. As the way will still be long, we believe a lot of hiccups can still happen, but it is the price to pay when investing in a potentially game changing field at its birth

Bitcoin is just the beginning — Ledger’s potential in the entire digital asset ecosystem.

Fast forward to 2020 — the light turns green. Ledger is once again on the rise, becoming massively profitable with the company beginning to hire high quality talent such as LVMH’s (and one of FastCo’s most creative people) Ian Rogers who joined as Chief Experience Officer. And then the IPO of Coinbase is a testimony of the scale taken by the field, while it may be only the beginning.

To date, Ledger has sold more than 3M hardware wallets in 190 countries and has more than 1.5M monthly users on Ledger Live. Notably, the company takes after Apple’s pioneering business model — seeing a mix in revenue from hardware sales and services as people transact. Today, much of the demand also comes from the B2B side with financial institutions needing to secure crypto assets for their customers. Yet, while Ledger’s momentum is impressive and earning Unicorn stripes (or horn) may be an achievement, it’s a small steppingstone in a much larger revolution and we believe the company is on track to successfully address a much larger market.

When thinking about blockchain, most associate the core use case with creating cryptocurrencies as an alternative currency that is decorrelated to the price of traditional flat currencies. However, we believe the true disruption of blockchain resides mainly elsewhere. Blockchain’s core potential is in transforming all existing asset classes into digital assets — bringing programmability, trust and ownership (we’ll come back to these in a bit). When we talk about digital assets, we should consider all types — including financial assets such as your traditional currencies, equity and debt but what about media assets like music, movies, and art or real estate, supply chain, personal data, medical data and so on?

Bitcoin, the new digital gold, is thus just the first use case of a very long list in the making. We believe that most physical assets will be “tokenized.” This means they will take on a real virtual existence in the digital world of the decentralized internet and thus the many processes surrounding them will be automatically registered or triggered. And Ledger could potentially be the market leader securing all your digital assets in the coming tokenized world

Parting Thoughts — an early investor’s bet on tomorrow’s tokenized world.

At Cathay Innovation, we truly expect that we are at the beginning stages of Ledger’s history and we’ve never been more excited by its potential. As investors, our job is to anticipate the big trends that will define the future before they become mainstream, stick to our bets and provide the support needed to the forward-looking Entrepreneurs paving the way. While long-term investments are always driven by a mix of experience, education, instinct, and discussions among team members — we also have to take into account timing as many companies have failed from being right too soon.

For us, Ledger is now extremely exciting as the shift of application to blockchain now on the verge of acceleration. We are in a very interesting time when the revolution is still emerging and small, but too important to ignore. Human history has already shown us the evolution of the financial system and the nature of currencies. What is gold beyond a metal that was agreed upon to be a currency and a storage of value? Similarly, some may say that the intrinsic value of cryptocurrency is zero while others argue that the value of traditional, printed money at massive scale everyday (as COVID-19 time has shown) should theoretically decrease with time.

While the market fluctuations are sure to persist, the blockchain revolution is here. Along with the technology, we’ve seen a massive acceleration of developers with 80% of today’s active engineers entering the blockchain space in the last two years. With development in the space becoming more common place, and next-gen blockchains becoming easier to program, we are starting to see a number of asset classes move to blockchains. We’re already seeing the tokenization of real estate, sports, personal data be given back to users and so on.

Coming back to Ledger — it is a hardware wallet and software service that can enable the storage of all these blockchain tokens with the highest security available. Thus, we believe that in the foreseeable future, Ledger will not only become the digital vault for cryptocurrencies, but for the digital ownership of your house, car, video games, avatars, music and all kinds of personal information. While the price of crypto may go down again, at Cathay Innovation, we are proud to be one Ledger’s core early backers and look forward to continuing our support of the company as it becomes one of the French-founded global leaders in tomorrow’s world where tokenization will play an incredibly central role.

Congrats Ledger Team !! The milestone is superb, and Lets go back to good work now 😊