Cryptocurrency trading software provider Talos, backed by big names such as Citibank and Andreessen Horowitz (a16z), has fully acquired cryptocurrency risk management platform Cloudwall.
While the size of the deal was not disclosed, Talos said Cloudwall will enhance its existing cryptocurrency portfolio management system to help institutional clients manage risk and optimize their portfolios.
“While Cloudwall’s focus is largely rooted in building the tools institutions need to manage their digital asset portfolios, Talos provides not only trading technology but also complementary elements of a PMS: portfolio engineering tools for portfolio construction and tools for P&L. “So this acquisition was a natural progression toward Talos’ mission to provide a comprehensive, institutional-grade PMS,” added Anton Katz, Talos co-founder and CEO, in an interview with The Block.
Founded in 2021, Cloudwall’s cloud-based platform allows users to run a variety of risk models and clearly view risks, allowing them to decide which risks to expose to and which to avoid, Katz said. “As risk tracking and management becomes increasingly relevant in the evolving digital asset landscape, these tools are becoming critical components in our customers’ toolkits,” he added.
Talos-Cloudwall deal
Talos and Cloudwall have been in discussions for several months regarding the acquisition itself, Katz said. Talos added that he has been familiar with Cloudwall since its inception and that the two companies have been discussing for a long time how they could partner.
“Talos and Cloudwall share the view that in the future, all assets will be digital assets,” Kyle Downey, Cloudwall co-founder and CEO, said in a statement. “Risk is fundamental to finance, regardless of asset class, and digital assets are no exception. That’s why we’re excited to have Talos backing us to continue our mission to build the risk management defenses institutions need to trade digital assets. “I’m delighted.”
Katz said the transaction was completed with no pending approvals.
The size was not disclosed, but it appears to be a small transaction. Cloudwall has raised a seed funding round worth $6.3 million in 2022 from investors including LocalGlobe and Illuminate Financial.
Cloudwall has offices in New York City and Singapore and, according to its LinkedIn page, appears to have fewer than 50 employees. Katz declined to comment on specific headcount at Cloudwall, but said some employees will join Talos after the merger.
In 2022, Talos was valued at $1.25 billion.
Cloudwall is Talos’ second acquisition, following D3X Systems last year. D3X has enhanced Talos’ capabilities in portfolio engineering, including tools for portfolio optimization, strategy backtesting, portfolio rebalancing, and risk and return attribution, Katz said. With the Cloudwall acquisition, Talos will expand its PMS offering across spot, futures, perpetual and options, Katz added.
Talos was valued at $1.25 billion when it raised $105 million in a Series B funding round in 2022. In addition to Citibank and a16z, investors include Wells Fargo Strategic Capital, BNY Mellon, PayPal Ventures, Castle Island Ventures, and Fidelity Investments.
Disclaimer: The Block is an independent media outlet delivering news, research and data. As of November 2023, Foresight Ventures is a majority investor in The Block. Foresight Ventures invests in other companies in the cryptocurrency space. Cryptocurrency exchange Bitget is an anchor LP of Foresight Ventures. The Block continues to operate independently to provide objective, impactful and timely information about the cryptocurrency industry. Below are our current financial disclosures.
© 2023 The Block. All rights reserved. This article is provided for informational purposes only. It is not provided or intended to be used as legal, tax, investment, financial or other advice.