California-based Vaurum, a company that offers financial institutions a way to trade and store bitcoins, has raised $4m in venture capital.

The investment is described as a seed round and comes from a group of investors that includes VC firm Battery Ventures, Tim Draper and former AOL CEO Steve Case.

Avish Bhama, Vaurum CEO, said in a prepared statement:

Bhama told CoinDesk the company plans to use the majority of its funding to hire additional engineering staff, while a small portion of the round will be used for regulatory compliance expenditures.

Vaurum's software can be described as a bitcoin exchange plugged into existing financial trading platforms already used by investors – a service sometimes known as a 'white-label' exchange.

Vaurum builds the bitcoin exchange software, but it is often branded as, and part of, a larger product that traders and investors have funds in. High trading volume is a major feature of Vaurum's platform, according to Bhama, who explained:

The commission structure Vaurum uses for this software levies a percentage of bitcoin for the company, while its white-label partner takes commission on the fiat side of trades.

Vaurum says that its software is already being used at hedge funds, foreign exchange dealers and other institutional investment houses. However, it has declined to specifically name any of its customers at this time.

"As we are set up in various different currency pairs across different networks around the world, it is compelling for arbitrage traders to come in and leverage our API to build trading strategies," said Bhama.

Roger Lee, a general partner at Battery Ventures, said in a prepared statement regarding Vaurum's funding that his firm believes bitcoin will flourish as an investment vehicle over the long-term:

Vaurum was accelerated at Boost VC as one of seven bitcoin companies to go through that incubator programme last summer.

The company competes with a number of other bitcoin-related startups for the attention of traders and investors interested in cryptocrrencies. One such platform in the same space as Vaurum is Singapore-based itBit, which has built a trading engine based on NASDAQ's software.

Another competitor is New York City's Coinsetter, which accesses exchange APIs such as Bitstamp in order to provide trading liquidity.

Vaurum's white-label approach, which quietly plugs into other platforms, is also reminiscent of bitcoin trading platform Buttercoin, which is backed by Google Ventures, and Bex.io, which raised $525,000 in funding at the end of 2013.

Investor image via Shutterstock