Cryptocurrency Exchange Platform CoinDCX in talks to raise $100-120 million from Existing Investors
According to three people familiar with the situation, cryptocurrency exchange platform CoinDCX is in talks to close a new financing round of $100-120 million (Rs 743-892 crore) from investors led by Facebook cofounder Eduardo Saverin's B Capital Group.
Existing investors Polychain Capital and Coinbase Ventures will also participate in the round, which is expected to value the company at more than $1 billion, according to these sources, making it the first crypto exchange to join India's growing unicorn club. A unicorn is a privately held company with a valuation of more than $1 billion.
Last December, CoinDCX raised Rs 100 crore from a group of investors that included Block.one, DG, Jump Capital, Uncorrelated Ventures, Coinbase Ventures, Polychain Capital, Mehta Ventures, and Alex Pack. In addition to this, it had raised nearly $19.4 million (Rs 144 crore) in three rounds in 2020.
CoinDCX, founded in 2018 by Sumit Gupta and Neeraj Khandelwal, facilitates the purchase and sale of cryptocurrency tokens. It also provides other cryptocurrency-based financial services, such as lending. According to CoinDCX, the company had 1.5 million registered users last month, after the user base had grown 700 percent since March 2020.
CoinDCX, which has been aggressively advertising on social media and television, intends to use the capital to increase customer acquisition. “The company may also look to grow inorganically by acquiring smaller exchanges in other markets, even as regulations for such exchanges remain hazy in India.”
Several investors in this space said crypto exchanges are a highly profitable business, and the upside of backing an exchange is enormous, despite India's increasingly uncertain regulatory environment.
Earlier this year, the crypto platform CoinSwitch Kuber raised $25 million from New York-based venture fund Tiger Global at a valuation of $500 million.
According to a crypto exchange investor, Indian exchanges have a significant global trading volume, so international investors are making a calculated bet. “The outcome potential is huge.”
According to Joel John, a principal at digital asset investment firm LedgerPrime, Coinbase's massive IPO earlier this year has set the stage for massive exits by crypto-related firms.
Rising interest in exchanges is not native to India, John said. “Institutional interest has shifted towards centralised financial products like exchanges. So, globally there is interest in financial entities with high revenue.”
In the meantime, a new generation of Indian cryptocurrency investors has emerged. According to industry estimates, this group numbers around 15 million people, the vast majority of whom are under the age of 25. This demonstrates the industry's enormous growth potential, according to Nitin Sharma, partner at Antler Global, a venture capital fund.
“For crypto-focused foreign funds, the perceived upside from crypto becoming a mainstream asset class especially for a new generation of Indian investors can more than justify the downside from regulatory risks,” said Sharma. “This is also a function of a lot of crypto wealth that has been generated globally and is now seeking new markets where the narrative of an alternate store of value or a hedge against inflation may appeal to certain consumers," he said.
Existing investors Polychain Capital and Coinbase Ventures will also participate in the round, which is expected to value the company at more than $1 billion, according to these sources, making it the first crypto exchange to join India's growing unicorn club. A unicorn is a privately held company with a valuation of more than $1 billion.
Last December, CoinDCX raised Rs 100 crore from a group of investors that included Block.one, DG, Jump Capital, Uncorrelated Ventures, Coinbase Ventures, Polychain Capital, Mehta Ventures, and Alex Pack. In addition to this, it had raised nearly $19.4 million (Rs 144 crore) in three rounds in 2020.
CoinDCX, founded in 2018 by Sumit Gupta and Neeraj Khandelwal, facilitates the purchase and sale of cryptocurrency tokens. It also provides other cryptocurrency-based financial services, such as lending. According to CoinDCX, the company had 1.5 million registered users last month, after the user base had grown 700 percent since March 2020.
CoinDCX, which has been aggressively advertising on social media and television, intends to use the capital to increase customer acquisition. “The company may also look to grow inorganically by acquiring smaller exchanges in other markets, even as regulations for such exchanges remain hazy in India.”
Several investors in this space said crypto exchanges are a highly profitable business, and the upside of backing an exchange is enormous, despite India's increasingly uncertain regulatory environment.
Earlier this year, the crypto platform CoinSwitch Kuber raised $25 million from New York-based venture fund Tiger Global at a valuation of $500 million.
According to a crypto exchange investor, Indian exchanges have a significant global trading volume, so international investors are making a calculated bet. “The outcome potential is huge.”
According to Joel John, a principal at digital asset investment firm LedgerPrime, Coinbase's massive IPO earlier this year has set the stage for massive exits by crypto-related firms.
Rising interest in exchanges is not native to India, John said. “Institutional interest has shifted towards centralised financial products like exchanges. So, globally there is interest in financial entities with high revenue.”
In the meantime, a new generation of Indian cryptocurrency investors has emerged. According to industry estimates, this group numbers around 15 million people, the vast majority of whom are under the age of 25. This demonstrates the industry's enormous growth potential, according to Nitin Sharma, partner at Antler Global, a venture capital fund.
“For crypto-focused foreign funds, the perceived upside from crypto becoming a mainstream asset class especially for a new generation of Indian investors can more than justify the downside from regulatory risks,” said Sharma. “This is also a function of a lot of crypto wealth that has been generated globally and is now seeking new markets where the narrative of an alternate store of value or a hedge against inflation may appeal to certain consumers," he said.
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