(Reuters) Venture capitalists show no sign of shying away from investing in startups related to Bitcoin even as authorities step up their scrutiny of the virtual currency and its possible connection to money laundering and other illegal activities.
Investment has jumped in recent months as Bitcoin, the prominent digital currency not backed by a government or central bank, has begun to gain a footing among businesses and consumers, a key step for it to go mainstream.
Startups such as Coinbase and BitPay Inc, which help facilitate bitcoin adoption by merchants and consumers, have raised millions of dollars so far. Interest is also growing in bitcoin trading, investment funds, and "mining" - the process of creating the digital currency.
Bitcoin, until recently a niche alternative currency touted by computer geeks and anti-government advocates, has garnered attention from a growing list of notable investors such as Andreessen Horowitz, which has invested in Facebook Inc, Twitter and Groupon Inc, and Founders Fund, which includes three founders of PayPal. Some devotees promote Bitcoin, which exists solely in cyber form, as the future of money, and in some investing circles it has created a buzz reminiscent of the early Internet age.
"What keeps me up at night is 'are we missing out on investments?' because if this is what I think it can be, we will regret not being even more active," said Micky Malka, founder of Palo Alto, California-based Ribbit Capital, which has invested in three bitcoin firms, including San Francisco-based Coinbase.
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