SA-based crypto exchange VALR announced that it has raised $50 million (over R750 million) in Africa’s largest ever crypto funding round.
This values the company at $240 million (R3.7 billion), a 10 times increase in value since July 2020.
The company was formed in 2018 by Farzam Ehsani (CEO), Theo Bohnen and Badi Sudhakaran – all of whom were originally part of Rand Merchant Bank’s blockchain team. They left the bank in May 2018 to set up VALR and started trading a year later.
Ehsani says the capital from the latest fund raising drive will be used to expand into new markets in Africa and India.
VALR has processed over $7.5 billion (R115 billion) in trading volume since its launch in 2019 and now serves over 250 000 retail customers and 500 institutional clients from across the globe.
Former FNB CEO Michael Jordaan was one of the early backers of VALR, who along with crypto exchange Bittrex, invested $1.5 million (R23 million) in seed capital.
A further $3.4 million was raised to help launch the exchange, which allows customers to trade more than 60 cryptocurrencies, reckoned to be the largest selection of any crypto exchange in SA.
VALR’s move into international markets follows similar moves by other SA-based crypto exchanges Luno and OVEX. Luno was acquired in 2020 by US-based Digital Currency Group (DCG) for an undisclosed sum with the ambition of building its customer base to one billion over the next decade. OVEX has recently embarked on an international expansion drive.
VALR’s oversubscribed Series B equity funding round was led by Pantera Capital, one of the world’s largest investors in blockchain, with $4.6 billion under management. Another coup for VALR was the financial backing it received from Avon Ventures, a venture capital fund affiliated with the parent company of Fidelity Investments, one of the world’s largest asset management companies.
Other investors in the latest VALR fund raise include Alameda Research, Cadenza, CMT Digital, Coinbase Ventures, Distributed Global, GSR and Third Prime.
VALR says it has processed over $7.5 billion (R115 billion) in trading volume since its launch in 2019 and now serves over 250 000 retail customers and 500 institutional clients from across the globe.
“The countries we want to focus our expansion efforts on in the short term are Nigeria, Ghana, Kenya, Botswana, Zambia and, of course, India,” says Ehsani.
“There are regulatory challenges in every country since we are still in cryptos early days and we want to be in countries where we can work together with regulators.”
Ehsani says the fund raising drive was completed in three months.
“We’re excited to have attracted these funds to the continent, since this is a huge vote of confidence in Africa and crypto.”
VALR says it plans to onboard many more institutions from the traditional financial system, including the largest banks, insurers and hedge funds, to assist them with the infrastructure needed to enter the crypto asset market.
“In next five to 10 years all financial institutions will have exposure to crypto, and we want to partner with them on that journey,” says Ehsani.
“I think their first step will be to provide their customers with the ability to purchase crypto, but there’s a whole host of products that can be built around that, from derivatives to lending using crypto as collateral. Our message for institutions and regulators alike is that this is a phenomenon that is not going away.
“We can offer institutions a white label service, backed by liquidity, security, sub-accounts, ledgers – everything that you would need for a full-service entry to the crypto market.
“Security is a huge priority for us. We have a dedicated cyber security team, and we also use the services of several external cyber security firms, so we see ourselves primarily as a security company. This is a major stumbling block for traditional financial companies entering this space, so this is where we have dedicated a huge amount of effort.”
“We’re very impressed with what VALR has built for retail and institutional traders over the past few years,” says Kumar Dandapani, managing partner at Cadenza Capital Management. “VALR is extremely well-positioned to emerge as an enduring financial institution that provides its clients asset allocation abilities in crypto and other global markets.”
Paul Veradittakit, partner at Pantera Capital, says Africa is ripe for crypto adoption both for asset diversification and payments.
“The world is on the precipice of huge financial change,” says Ehsani.
“Crypto assets will become more and more pivotal to all our lives. VALR is here to help bridge our customers from the old financial system to the new. Whether you’re an individual or an institution, we look forward to serving you.”