Cryptocurrency exchange platform CoinDCX is in discussions 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, three people in the know of the matter said.
Existing investors Polychain Capital and Coinbase Ventures will also be participating in the round, which will value the company at more than $1 billion, these people said, making it the first crypto
exchange to enter India
’s swelling unicorn club. A privately held firm with a valuation of more than $1 billion is termed a unicorn.
Queries sent by ET to CoinDCX, Polychain Capital, B Capital and Coinbase Ventures did not elicit a response till Wednesday press time.
CoinDCX had raised Rs 100 crore last December
from a clutch of investors including Block.one, DG, Jump Capital, Uncorrelated Ventures, Coinbase Ventures, Polychain Capital, Mehta Ventures and Alex Pack. Including this, it had raised close to $19.4 million (Rs 144 crore) across three rounds in 2020.
Founded in 2018 by Sumit Gupta and Neeraj Khandelwal, CoinDCX helps people buy and sell crypto tokens. It also offers other crypto-based financial products such as lending. The company had 1.5 million registered users last month, after the user base grew 700% since March 2020, CoinDCX had told ET.
CoinDCX, which has been on an aggressive advertising campaign on social media and television, is looking to use the capital to double down on customer acquisition. “The company might also look to grow inorganically by acquiring smaller exchanges in other markets, even as regulations of such exchanges continue to be fuzzy in India,” said one of the people ET spoke to.
Several investors in this space ET spoke to said crypto exchanges are a highly profitable business and the upside of backing an exchange is immense despite an increasingly uncertain regulatory environment in India.
Earlier this year, crypto platform CoinSwitch Kuber raised $25 million at a valuation of $500 million from New York-based venture fund Tiger Global.
A crypto exchange investor said Indian exchanges have a substantial global trading volume, so the international investors are taking a calculated bet. “The outcome potential is huge.”
According to Joel John, a principal at digital asset investment firm LedgerPrime, US-based Coinbase’s massive IPO earlier this year has set the stage for crypto-related firms generating massive exits.
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.”
Meanwhile, a new generation of Indian crypto investors has emerged. This group is about 15 million as per industry estimates, a majority of whom are under 25 years in age. This shows the huge growth potential for the industry, said Nitin Sharma, partner at Antler Global, a VC 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, while declining to comment on any individual rounds. “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.