Coinbase, the American behemoth exchange, is in talks to acquire a peer-to-peer rental startup Omni.
Omni’s business model is going downhill and Coinbase might come to its rescue. According to reports, the cryptocurrency exchange plans to acquire the company. Why? Because it wants its engineering talent to work on the Coinbase Earn product. Coinbase Earn rewards users with cryptocurrency for completing online educational programs. The two companies are currently negotiating. A Coinbase representative told TechCrunch that there’s no official deal on the table yet.
Coinbase needs more expertise
Omni has raised a total of $35 million from investors including Flybridge, Highland, and Founders Fund. In 2018, the firm even secured $25 million from Ripple.
The company first became popular in San Francisco, eventually spreading across the country. Originally a physical storage business, it shifted its business model and became a digital marketplace of rental goods.
However, lately, the company has been doing poorly. Plus, not all of its management decisions were praisable.
“Omni was selling its storage business to SoftBank-funded competitor Clutter, and the transition was rocky. Users complained about changing prices and misplaced items, alarmed that suddenly a different startup had control of their possessions,” writes TechCrunch.
As a result, Omni is not too profitable and the company has resorted to layoffs. According to sources familiar with the situation, it has sacked seven employees. Yet, the company is still receiving interest not only from Coinbase but also from Thumbtack.
For the uninitiated, Coinbase provides a variety of digital token services. And 12% of its product and engineering employees came through acquisitions. To that end, Omni’s engineering employees already have experience with digital tokens. To that end, Omni began allowing customers to earn its cryptocurrency, XRP, for renting out their possessions, shortly after cryptocurrency company Ripple invested in the company.
It remains to be seen whether the companies will reach a mutually beneficial deal.