a16z in Talks to Invest in CoinSwitch Kuber

Andreessen Horowitz Nears First Indian Startup Investment

a16z is progressing towards its initial investment in a startup operating within India, the world’s second-largest internet market. This year alone, India has seen the emergence of over two dozen unicorn companies.

CoinSwitch Kuber as a Potential Target

Sources familiar with the matter indicate that the Menlo Park-based firm is in the concluding phases of discussions to invest in CoinSwitch Kuber, an Indian crypto-trading startup. Three individuals with knowledge of the negotiations confirmed this to TechCrunch.

The prospective deal places a valuation of $1.9 billion on the Bangalore-headquartered company, according to two sources. Furthermore, it is reported that Coinbase is also participating in this new funding round.

Recent Funding and Valuation Growth

CoinSwitch Kuber achieved a valuation exceeding $500 million in April of this year, following a $25 million investment led by Tiger Global. Should the agreement with a16z be finalized, this will represent the third financing round for CoinSwitch Kuber within the current year.

Last week, TechCrunch reported on CoinSwitch Kuber’s efforts to secure Series C funding, potentially reaching a $2 billion valuation. The report highlighted engagement with both Andreessen Horowitz and Coinbase, though it did not name a leading investor at the time.

Deal Contingencies and Responses

It is important to note that the terms of the proposed deal are subject to change, and negotiations may not ultimately result in an agreement. Details regarding the deal were initially reported on Wednesday.

The startup itself has declined to provide a comment. Requests for comment sent to Coinbase, a16z, and existing investors – Tiger Global and Sequoia Capital India – have not received responses.

User Base Expansion Amidst Regulatory Scrutiny

The investment discussions coincide with a period of significant user base growth for CoinSwitch Kuber, more than doubling in recent months. This expansion occurs despite increasing resistance from local authorities concerning crypto assets.

The company’s flagship application boasted over 10 million users in India last month, a substantial increase from approximately 4 million users in April, as advertised by the startup over the weekend.

Growth of Crypto Startups in India

Several crypto startups in India have demonstrated rapid growth while maintaining remarkably low customer acquisition costs (CAC). This trend is fueled by the increasing number of millennials in the South Asian nation initiating their investment journeys.

Funds with a strong presence in India, including Accel, Lightspeed, WEH, and Kalaari, have recently begun formulating strategies to support crypto startups, as previously reported by TechCrunch.

Competitive Landscape

B Capital recently invested in CoinDCX, a competitor to CoinSwitch Kuber, in a $90 million round that valued the company at approximately $1.1 billion. CoinDCX currently has a user base of 3.5 million.

Regulatory Environment

Indian policymakers have been deliberating the legal status of digital currencies within the South Asian market for several years. The Reserve Bank of India has voiced concerns regarding private virtual currencies, while simultaneously planning pilot programs for its own digital currency, potentially launching as early as December.

Unicorn Growth in India

This year has witnessed the emergence of approximately 27 Indian startups achieving unicorn status, a significant increase from the 11 recorded last year. This surge is attributed to increased investment activity from prominent investors, such as Tiger Global and Coatue, who are global counterparts to Andreessen Horowitz.

Apna announced earlier today that it had secured $100 million in a funding round led by Tiger Global, achieving a valuation of $1.1 billion and becoming the youngest Indian company to reach unicorn status.

Further Investment Activity

Groww, an investment application geared towards millennials, is currently in discussions to raise a new financing round that would value it at $3 billion, as reported by TechCrunch on Wednesday. The startup is reportedly engaging with Coatue in these discussions.