Aug 22 (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."