Circle gets $17M to expand bitcoin service, releases first product to select users

Circle, which is contending to be one of the top dogs in the emerging bitcoin economy, announced a major new funding round of Wednesday, but the company is still being cagey about its specific business plans.

Circle was launched last fall by serial entrepreneur Jeremy Allaire with $9 million, and aims to make it easier for everyday consumers to navigate the geeky, esoteric world of online payments. Wednesday’s funding news means Circle has now raised a total of $26 million, and appears to be in competition with Coinbase, the other big player in the bitcoin space.

Allaire said by phone on Tuesday that Circle is releasing its first product to a handful of users this week, but that the company is holding back on making it more widely available. He stressed that Circle is for now focused on nailing down the technical and security aspects of its bitcoin services, which will help it avoid the embarrassing blunders that have befell many other virtual currency start-ups.

Allaire contrasted Circle with Coinbase by saying the latter is positioned more for male early adopters and speculators, but that Circle will be focused on reaching a broader user base, especially younger people, who will be able to fund bitcoin accounts with credit cards and other common payment tools. Circle’s news release says:

The company’s forthcoming products, which entered limited availability release today, promise to allow consumers and businesses to use digital currency easily, reducing much of the friction and risk that is currently associated with Bitcoin.

The best I can make of it is that Circle is trying to create an internet banking platform that will make it easy for people to pay each other, and to shop without the laggy, complicated process that is today’s bitcoin reality. I’m sure we’ll hear more soon.

In the meantime, it’s best to take Circle seriously, in part because of Allaire’s own background — he’s a serial entrepreneur who build and sold the internet company Brightcove, and because of its new investors. These include Second Market founder and big bitcoin holder, Barry Silbert, and Leonard Schrank, the former CEO of global financial clearing house SWIFT.

The new funding round was led by Breyer Capital, Accel Partners and General Catalyst Partners as well as new investor Oak Investment Partners . Others included Pantera Capital, Circle board member M. Michele Burns and Fenway Summer.