Crypto proprietary trading firm Breakout raises $4.5 million in seed funding

Breakout Trading Group, a crypto proprietary trading firm, has raised $4.5 million in a seed funding round led by RockawayX. Other investors in the round included Andrew Kang's Mechanism Capital, Round13 Capital, C² Ventures and IOBC Capital, Breakout said Wednesday.

The startup began raising funds for its seed round in February and closed it earlier this month as an oversubscribed round, co-founder and CEO Alex Miningham told The Block. Breakout initially sought $3 million, received $6 million in commitments and ultimately closed the round at $4.5 million.

The seed round was structured as a priced round with token warrants, Miningham said, declining to comment on the valuation. RockawayX has taken a board seat at Breakout as part of leading the round, he added.

Miningham, a general partner at crypto venture capital firm Ascensive Assets, co-founded Breakout last year with Dylan Loomer, a crypto influencer with the X handle TraderMayne and around 500,000 followers. The duo spent roughly nine months putting together the platform and launched it last November. Since the launch, Breakout says it has acquired over 4,000 unique traders who have collectively traded over $12 billion in total notional volume.

What is Breakout?

Breakout is an evaluation-based crypto proprietary trading firm. Miningham said traders can choose between one-step or two-step evaluation options, with account sizes ranging from $5,000 to $100,000.

In the one-step option, traders need to aim for a 10% gain, which can be achieved in a single phase or even one trade. The drawdown rules are stricter, meaning there are tighter limits on how much the account balance can drop, Miningham said.

In the two-step evaluation option, traders must first achieve a 5% gain, followed by a 10% gain in the second stage. The drawdown rules are wider, allowing for more flexibility in account balance fluctuations. Traders need to meet these evaluation goals to receive a funded account of up to $200,000 in notional funding.

"In both the evaluation stage and funded stage, trading takes place in a live market environment with notional funds," Miningham said. "If a trader passes the trading evaluation and receives a funded account, they are eligible to receive 80-90% (80% being the default, 90% available as an add-on) of their funded account gains in the form of payouts. They provide their crypto wallet address and receive their share of the funded account gains."

Miningham said Breakout has integrated several of the top and most liquid centralized crypto exchanges, declining to name them. "Our focus is on providing the best available execution, which means we focus on exchanges that have the most liquid USDT-margined perpetual contracts," he added.

As for its business model, Breakout charges a fee for traders wishing to undertake its evaluation programs and receive a funded account, Miningham said. Breakout also uses its own funds for discretionary proprietary trading in the live market and periodically chooses to copy trade successful traders with a good track record, Miningham added.

Breakout's closest competitors are Crypto Fund Trader and BrightFunded, Miningham said.

Breakout's growth plans

With fresh funding in place, Breakout plans to expand in the Asia-Pacific and Latin America regions and acquire more users via a global affiliate program.

Miningham said Breakout is targeting high-profile traders with large social media followings across YouTube, Twitter and Instagram globally for its affiliate program. "We will be investing heavily in our affiliate network throughout the remainder of 2024 and into 2025 to increase brand awareness specifically in developing and underserved markets in Asia, Latin America and the Middle East," Miningham said.

To that end, Breakout will also expand its current team of over 20 people by hiring across functions, including finance, trading, customer service and marketing throughout the next 12-18 months, Miningham added.

"There are an estimated 35-50 million active crypto traders globally; many are set to deploy and scale sophisticated, high-yielding strategies, but are hampered by a lack of capital. Breakout offers funded accounts to traders who demonstrate their know-how in carefully designed evaluation programs," Viktor Fischer, managing partner of RockawayX, said in a statement.

Asked if Breakout plans to launch its own token to issue rewards to users, Miningham said there are no current plans for a token, but since the investors have been provided with a token warrant, Breakout might launch one if the regulatory landscape allows for it in the future.

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