(Reuters) - Ark Labs, a three-month old startup developing solutions to speed up bitcoin transactions and lower costs, has raised $2.5 million in a pre-seed funding round led by billionaire investor Tim Draper.

Besides venture capital firm Draper Associates, Fulgur Ventures, Axiom Capital and angel investor Stephen Cole also participated in the round, the startup said on Thursday.

WHY IT'S IMPORTANT

The funding underscores Silicon Valley's growing interest in the companies seeking to make crypto, particularly bitcoin, a mainstream mode of payment.

The world's biggest cryptocurrency has grown into a formidable asset class, with billions of dollars in inflows from traders, particularly after exchange-traded funds tracking its price were approved in January.

However, some analysts say bitcoin will need to have more utility to sustain its high level of interest.

Ark said it will use the funds to expand its team and enhance its technology.

CONTEXT

Draper, who founded Draper Associates in 1985, has also invested in SpaceX, Tesla, Coinbase and Robinhood.

He also led a funding round in bitcoin lending company Zest Protocol in May.

KEY QUOTES

"Today, we have to focus not only on how to buy and store bitcoin but how to use it as a medium of exchange for everyday purposes," Draper said.

Ark allows for "seamless bitcoin payments," he added.

"Bitcoin adoption faces a strong headwind until any non-technical person can safely achieve exposure," said Henry Robinson, co-founder of crypto mining firm Decimal Digital Currency.

"As mature investors and mature capital with longer timeframes grow their positions in bitcoin, the asset class will mature and their approach will trickle down to individual asset and fund managers."