A new nationwide group of investors has opened offices in Austin, San Francisco and New York to back startup efforts around the virtual currency known as Bitcoin.
BitAngels was formed at a recent Bitcoin conference in Silicon Valley, where investors and entrepreneurs saw a need for an angel network to support development efforts around the technology.
So far, 65 investors from across the country have committed a total of $6.7 million, which will be invested in increments starting at $20,000, said Bit Angel co-founder David A. Johnston. The group has received 50 applications for funding, he said.
At the on-site locations, investors and members of BitAngels will provide mentoring and help with incorporation, commercialization and marketing. In Austin, BitAngels will operate out of startup incubator Tech Ranch.
Bitcoin is a form of digital currency that allows individuals to transfer e-currency and make instant payments with anonymity. Rather than a government-regulated banking system, it uses decentralized peer-to-peer technology to manage transactions.
The concept has been the subject of controversy, with some saying it facilitates criminal activity. Digital currency business Liberty Reserve recently was indicted for allegedly laundering more than $6 billion in the past seven years.
But backers say they see big potential in the technology.
“People think of it today as a payment method, but I think Bitcoin and other digital currencies will power the next wave of the Internet’s growth,” said Johnston, an Austin entrepreneur who is founder of software maker Engine.co and specialty title company General Governance Inc.
Johnston co-founded BitAngels with Marketwire founder Michael Terpin and angel investor Sam Onat Yilmaz. It will operate similarly to other angel networks — not as a formal fund, but as a facilitator that connects entrepreneurs with investors who write individual checks.
Johnston said Austin is an ideal place for an office because the Bitcoin community here is growing.
“There’s a Bitcoin meetup group and a number of companies already accept Bitcoin,” he said. “We’ve got critical mass in investors, startups and programmers. Now we want to bring in funding that can help people who are doing side projects turn them into companies, and help those getting off the ground grow faster.”