Circle Ventures Backs $4M Round for Blockchain-Based Debt Provider Obligate

Obligate, a blockchain-based regulated debt securities business, has launched a $4 million seed extension financing.

The cash will be used to help the company, originally known as FQX, scale its debt platform, which is slated to go live on the Polygon blockchain next month.

Earlybird and SIX Fintech Ventures were the first seed investors to join the extension. They were joined by Blockchange Ventures and Circle Ventures. Obligate’s seed round now exceeds $8.5 million when combined with its initial financing in late 2021.

Switzerland-based Obligate enables businesses to issue on-chain bonds and commercial paper – or debt securities that outline the terms of a loan – in order to receive funding from investors in a regulated decentralized finance (DeFi) ecosystem. Alternative fundraising methods may become more popular as venture capital firms and traditional finance (TradFi) investors become warier following the collapse of the multibillion-dollar controlled cryptocurrency exchange FTX.

“Obligate combines the benefits of DeFi with the trust and regulation of TradFi,” said Obligate co-founder and CEO Benedikt Schuppli in an email to CoinDesk. “We allow direct issuance of blockchain-based bonds from the issuer to the wallet of the investors, which makes Obligate more efficient than many existing bond platforms.”

Before constructing a bond program tailored to their liquidity needs, issuers must go through Know Your Customer (KYC) verifications, which may be completed in a few clicks. According to Schuppli, the liquidity will be denominated in stablecoins such as USDC but will be easily convertible into US dollars.

Investors will be able to use their existing crypto wallet to access Obligate. The investor holds the corresponding eNote (ERC20 token) for each investment, which bears the right to receive payment at maturity or collateral in the event of a default.