Israeli start-up Spondoolies-Tech Ltd. has raised $1.5 million from Bitcoin Shop Inc. (BTCS) a block-chain technology company engaged in bitcoin verification services. Based in Kiryat Gat in southern Israel, Spondoolies-Tech is a transaction verification server manufacturer.
BTCS's investment in Spondoolies follows last month's announcement that it will merge with the Israeli company. The investment serves as the first integral step of the planned merger. Together, the two companies intend creating the world's first publicly traded company to produce Bitcoin transaction verification equipment and deploy Bitcoin mining resources.
Under the terms of the definitive investment agreements, BTCS purchased a 6.6% equity interest in Spondoolies, and has received certain exclusivity rights and pricing for current and future Spondoolies' products as well as a $1m breakup fee, in case the planned merger between BTCS and Spondoolies is not consummated. The investment in Spondoolies was based on a pre-money valuation of approximately $21.2m.. Founded in August 2013, Spondoolies is Israeli venture backed and has shipped thousands of servers to customers around the world in the past year.
On completing the merger, the companies will equally share the dilution resulting from BTCS' April 22, 2015 $2.3m financing. Charles Allen will serve as the merged entity's CEO and chairman, and Guy Corem, Spondoolies CEO and cofounder, will serve as a board member and executive officer. Additionally, Yuval Rozen will serve as BTCS' CFO. The merger is subject to a number of conditions, including satisfactory completion of diligence and execution of definitive agreements.
Allen said, "This is a powerful merger as the technologies of the two companies are clearly very complementary and stand to produce immense revenue growth while delivering value to customers, shareholders, and employees."
Corem said, "We are excited to begin our partnership with BTCS and appreciate their support during a transformative part of our company's growth. We believe this new relationship will ensure our ability to continue development and production of innovative and high quality products, targeted mainly for internal use of the merged company but also to deliver the highest quality bitcoin mining equipment for our transaction verification services."
Published by Globes [online], Israel business news - www.globes-online.com - on May 18, 2015
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