Indian crypto exchanges are raising money after landmark ruling, but coronavirus concerns have affected their deals

Quick Take

Indian crypto exchanges are gearing up to raise money
At least four out of seven Indian crypto exchanges told The Block they are looking to raise funds to either expand or relaunch their operations in the country – but risks related to the coronavirus pandemic have hampered such efforts
These exchanges include Unocoin, BuyUcoin, CoinRecoil and Belfrics, among others.

At least four cryptocurrency exchanges in India are seeking capital in the wake of a landmark ruling by the country’s Supreme Court earlier this month.

Exchanges that are currently operational, as well as those relaunching, are all raising funds. These include Unocoin, BuyUcoin, CoinRecoil and Belfrics, among others. But according to interviews conducted by The Block, the current investing climate has proven difficult for such companies given the ongoing coronavirus crisis.

Bengaluru-based Unocoin, one of the oldest players in the country having founded in 2013, is looking to raise $5 million Series A, The Block has learned.

Sathvik Vishwanath, co-founder and CEO of Unocoin, confirmed the fundraising plans, barring the targeted amount as it may change. He said the exchange is raising fresh capital for "new customer acquisition and improving the customer experience."

Vishwanath acknowledged that, in general, fewer investors are willing to talk about funding right now, given the global pandemic. Still, the Supreme Court’s ruling has generated new interest in India’s crypto sector, he said.

The ruling lifted the banking ban enacted by the Reserve Bank of India in 2018. That favorable decision has led to a renewed sense of hope that global investors will be drawn to the space.

If Unocoin is able to raise the targeted amount of $5 million, that would bring the exchange’s total funding to date to $7.28 million, Vishwanath told The Block. The exchange is currently backed by a group of investors that includes Digital Currency Group and Tim Draper’s Boost VC.

While Unocoin has seen growth in its users recently due to the ruling, its volumes have taken a hit given the pandemic and economic slowdown, said Vishwanath.

“We have 1.3 million customers," Vishwanath told The Block. "We are adding 500-700 customers per day since the lifting of the ban. Our top cities include Mumbai, Pune, Delhi, Bengaluru and Ahmedabad. While in terms of volumes, we were about $500,000 per day before the issues, and now we are around half of that."

But that hasn't stopped Unocoin from expanding, according to Vishwanath. The exchange is looking to launch a number of new services in the year ahead, including a lending platform, margin trading and a derivatives platform.

"We are also looking to revitalize our merchant gateway and utility bill payment services using bitcoin," he told The Block.

Talks in 'final stages'

Another oldest exchange, BuyUcoin, founded in 2016, is looking to raise around $2.5-3 million in a seed funding round, CEO Shivam Thakral told The Block.

"We're currently in talks with two different investors," Thakral said. "One is a private equity group, and the other is a U.S.-based publicly listed company."

He added that the talks took place before the pandemic and are in "final stages."

Once raised, BuyUcoin hopes to convert non-tech savvy people of India to crypto investors, Thakral told The Block.

"We will also launch operations in Europe in April, as well as in Africa and North America by the end of Q2 2020," he added.

Like Unocoin, BuyUcoin also plans to launch several new products and services, including derivatives platform, lending platform and decentralized exchange, among others.

And in terms of users and volumes, BuyUcoin has seen growth in both the metrics since the lifting of the ban, Thakral told The Block. He said the exchange currently has around 400,000 users as compared to about 320,000 before the ban.

Volumes-wise, BuyUcoin is now doing around $200,000-$250,000 per day as compared to about $50,000 a day during the ban, said Thakral, adding that the average volume per user per month is around $2,600. BuyUcoin's current top five markets are Bengaluru, Delhi, Mumbai, Chennai and Ahmedabad.

As part of its expansion plans, BuyUcoin is also looking to add around 15-20 more people to its current team of 34 across functions, said Thakral.

If BuyUcoin ends up raising the targeted funds, it will bring its valuation from the current $12 million to around $14-$15 million, he added.

Those relaunching and raising funds

Indian crypto exchange CoinRecoil, which is planning a comeback, is also looking to raise at least $500,000 in Series A funding, co-founder and director Kunal Barchha told The Block.

"We were in talks with three angel investors, but coronavirus has shut everything down," said Barchha, adding that CoinRecoil will still continue talking with investors to raise the targeted funds.

CoinRecoil was launched in February 2018, two months before the RBI ban came into effect, and shut shop in August 2019 as "it was hard to manage funds, legal expenses, salaries and zero revenue," Barchha told The Block.

At the time, CoinRecoil survived via personal funds, from family and friends, worth around Rs. 75 lakh ($98,000), said Barchha.

While CoinRecoil is planning to relaunch, it has not yet set a specific date, Barchha added.

However, Belfrics, which was planning to relaunch its operations by April, could see a delay.

"Due to COVID-19, everything is slowed down," Belfrics founder and CEO, Praveen Kumar Vijayakumar, told The Block.

But the exchange, as part of its global expansion plans, is looking to raise $20 million in its first capital raising round, said Vijayakumar.

BTCXIndia is also planning a comeback on May 5, but is not looking to raise funds, for now, founder and CEO Kamesh Mupparaju told The Block.

"BTCXIndia and ETHEXIndia both belong to us. So, initially, we will launch BTCXIndia with BTC /INR pair and in the future, we will launch ETH/ INR also on the BTCXIndia platform," said Mupparaju.

'Sufficiently funded'

Other exchanges in India, such as WazirX and Zebpay, are not looking to raise funds anytime soon.

"We're sufficiently funded and growing fast. We're looking to fund others through our $50 million 'Blockchain For India' fund," WazirX founder and CEO Nischal Shetty, told The Block.

“Our trading volume is up 450% since the opening of banking in India," said Shetty. "New volumes are around $100 million per month now, and new user signups are up 400%." He declined to disclose specific signup figures.

Zebpay is also not looking to raise funds in the immediate future, said the exchange's CMO Vikram Rangala.

Another Indian crypto exchange, CoinSwitch, did not respond to The Block's request for comment by press time.

Earlier today, Mumbai-based crypto exchange CoinDCX raised $3 million in Series A funding, led by BitMEX operator HDR Group, Polychain Capital and Bain Capital Ventures.