Tesseract recently published its 2021 annual report, and as part of our “full transparency” directive, we are glad to make the report available for anyone who would like to take a view of it.
The report is divided into three sections. The first section aims to introduce the reader to the industry, Tesseract’s business, its teams, and its areas of expertise. The second part is the traditional financial section, where the reader can take a look at the balance sheet, P&L statement, and other aspects and changes in equity. Last, the report includes a translated version of the 3rd party audit executed by Grant Thornton.
The report includes the CEO’s report, which we share below. To get a copy of the 2021 annual report, please contact us at email@example.com.
Looking back on 2021– a year Tesseract truly scaled up on the back of a massive expansion of both our financial, intellectual, and technological capabilities.
Over the last twelve months, we enhanced our existing service offering and value proposition, sealed a landmark funding round, launched several innovative products (e.g., API-based Tesseract Earn) and got audited by Grant Thornton, while profitably increasing revenue over 10x year-on-year.
The first significant milestone was our successful Series A fundraise in June 2021 – a $25 million funding round (one of the largest Series A fundraises in Finland to date) from leading international venture capital investors and crypto companies. This funding round represented external validation of Tesseract’s progress to date and our future strategy and plans.
As a result of this fundraising, we were able to strengthen our board and bring some of the leading minds in the industry to support our growth. The capital has been deployed prudently to further develop our institutional offering and bring new key clients into the Tesseract ecosystem. Headcount grew from 5 at the end of 2020 to 31 at the end of 2021, emphasizing strengthening our technological and commercial capabilities.
I am delighted with our performance against the targets we set for the year. Our priorities were to:
We achieved each one of these targets. To start, 2021 was a great year financially. We reached more than €7 million ($8M) in revenue with earnings before interest and taxes (EBIT) of almost €2 million ($2.2M). This represented a more than tenfold increase in revenue from 2020, and improved operational profitability provides us with a solid foundation for 2022 as well.
Our lending operations grew significantly during the year. Expanding the overall loan book was a key ongoing strategic target, and we succeeded in doing so. Tesseract continues to invest heavily in talent, sales, technology, and products to ensure continued success in this area.
The new iteration of our Earn product was launched to great commercial success in December 2021, and targets set out in terms of risk management were achieved.
Tesseract is a nimble company that is always on the lookout for the next area of growth, and decentralized finance (DeFi) is one area in which we have made considerable progress. Throughout 2021 and into 2022, there were obvious signs of market interest and demand, and, in anticipation of institutional adoption of DeFi, we assembled a team of DeFi experts, built a >12-month track record of successfully managing DeFi yield farming portfolios, and achieved significant commercial success by attracting external capital to our DeFi product beginning in Q2 2021.
As you read this report, the crypto world continues to deal with the fallout from the collapse of the Terra ecosystem and its stablecoin, TerraUSD (UST). Thanks to the vigilance and sophistication of our DeFi risk management systems and team, we saw this event coming and exited all allocations on our UST-associated DeFi strategies. This response demonstrated the efficacy of our systems and provided further validation of our risk management strategy – as well as vital peace of mind for current and future investors.
On the lending side, our client roster advanced significantly during 2021 with the addition of several blue-chip crypto names across both the borrowing and lending sides of the business. Quantitively, the number of regulated entities we count as our clients rose almost threefold from 12 in 2020 to 35 in 2021.
Finally, the company has made strides and large investments in information security and is well on its way to being certified both in ISO27001 and SOC2 by the end of 2022. These are important milestones in our strategy to be a transparent and trustworthy market leader.
Going forward, we aim to continue to drive growth. Our priority has always been to create superior value for our clients, providing them with the tools to take their business to the next level.
We will continue to focus on delivering excellent products, building deep partnerships, and demonstrating trust and transparency across all areas of the business. That said, even if we target developing our revenue and loan book, we consider ourselves a product-first company first and foremost. We believe that Tesseract will ultimately win or lose based on its products and the value it brings to its partners from those products.
The second and equally important growth enabler relates to regulatory expertise, superior risk management, and operational excellence. We continue to improve our internal processes to enhance the efficiency and scalability of the business while complying with all rules and regulations of the jurisdictions we operate in.
Given the high-growth nature and inherent volatility of the crypto industry, we will continue to sharpen our portfolio and risk management processes to gain a competitive advantage and capture value from opportunities in the market. The future looks more promising than ever for Tesseract, and I firmly believe we are in a great position to continue our success into 2022.
Finally, I would like to thank all our partners, investors, stakeholders, and colleagues for helping us to achieve the growth we have experienced during 2021, and I look forward to our continued upward trajectory in 2022!
Yichen Wu, Co-founder & CEO
April 2021, Helsinki