Indian crypto exchange CoinDCX is in talks with investors to raise about $100 million Link. There are about 4 big crypto exchanges in India, led by Binance backed WazirX, CoinDCX, Zebpay, and CoinSwitch.
CoinDCX is currently backed by Polychain Capital and Coinbase Ventures and the new set of investors may include B Capital. Post the equity raise, CoinDCX may become a unicorn with a valuation of over $1 billion. Prior to this CoinDCX had raised $20 million in 3 rounds, making this new investment quite big for the company. The size of the raise is eye-opening, given the regulatory uncertainty in India around cryptocurrencies and the investigation into WazirX's FEMA violation.
CoinDCX has seen strong growth in the last 1 year. Users on the platform have grown sevenfold during the time period and the exchange has 1.5 million users. It plans to use funds for geographical expansion. That makes sense as it helps de-risk the business against uncertainties in India. Lately, the company has been doing extensive marketing on social media and TV and I too have seen ads popping up on multiple YouTube videos. In fact, it probably outspends other exchanges on marketing. The ad spend is helping the company achieve strong user growth highlighted above.
This investment, if completed will be the second investment this year in Indian crypto exchanges, the first being Tiger Global's $25 million investment in CoinSwitch Kuber, valuing the company at $500 million.
It is a good thing that money is flowing in the crypto space in India. India has a majority of its population under the age of 35 and it's a country of ~1.4 billion. That makes it a huge market and probably the biggest potential market for cryptocurrencies. China's crackdown on crypto leaves only us as a nation where there are so many people.
Let's see if valuations make sense. Most people that invest in crypto will be part of the urban population. That population is probably around 20% to 30% if one includes all small cities. Of the entire Indian population, only 60 million have brokerage accounts. So it is safe to say that India's retail investor population is quite small. Assuming that all will be interested in cryptocurrency is not right. Let's say 20% are interested and that I think is an exaggeration. So India probably has a potential investor population of 10 to 15 million as far as cryptocurrency is concerned. Coinbase has 60 million users and it is present in multiple countries. Its valuation is about $100 billion.
Compared to Coinbase, CoinDCX still looks cheap from an investor's point of view despite all the country-risk, given the potential for growth. With 1/40th the number of users, it is currently valued at 1/100th of Coinbase. Can see why investors are rushing to Indian exchanges. There is room to expand overseas and the investor base is only set to grow.
I am sure CoinDCX will complete the equity raise. I also think that some of the Indian exchanges may actually become some of the biggest exchanges in the world in the future. The potential is certainly there.
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Nice to see the great people of Indian bullish on cryptocurrency despite the FUD and all. It's a good thing that these people are showing so much believe in the future of cryptocurrency