Nascent bitcoin exchange Coinsetter has completed over half of a $1m funding round by crowdsourcing from its early adopters.
Last Monday, CEO Jaron Lukasiewicz sent an email to those who had already signed up for accounts at his exchange to ask if they would like to invest in the interim seed round. Lukasiewicz, who recently launched the public beta version of the exchange, originally secured a $500,000 seed investment in April from a group of angels including: Barry Silbert’s Bitcoin Opportunity Fund, Roger Ver and Technology Entrepreneur Jimmy Furland, among others. He says:
“We have commitments and serious interest on over half of our round, and I expect it to be filled completely before our announced cut off date.”
Lukasiewicz has a commitment from several of his original seed funders, although he points out that it isn’t common for original seed investors to be the primary investors in a new round.
He sent the fundraising email to everyone who has signed up for a beta account, which he says will number “in the thousands”. He confirms he has offered these investors a discount on what he hopes will be a “very high” Series A round valuation.
Lukasiewicz reveals that only accredited investors will be able to put money into the company, and adds that he will be accepting bitcoin as a funding option. Which bears the question, why does he need the money so soon after launch, when the service has only just gone into public beta? Lukasiewicz comments:
“We want to hire more developers and make sure that with the launch and initial customer support, our team is of the appropriate size to handle the support and to enable us to keep up with rapid development over the coming months.”
Lukasiewicz has had to scale back and retool his exchange strategy since the idea’s initial conception. When he originally raised his seed round in April, the Forex trading platform included margin trading capabilities which have since been removed from the initial version, while conversations around margin trading features have become steadily more muted. Additionally, his strategy around US customers has also pivoted once or twice.
The exchange was initially to serve US customers, but he canned that idea in the summer, following regulatory concerns. Since then, he has decided to serve a US customer base by offering bitcoin-only transactions: avoiding fiat in a bid to evade money services business (MSB) status in individual states. He says:
“You see other companies raising $1m or $2m A rounds, but we did our first round when no one cared about bitcoin and we raised $500,000. If we had been able to raise that kind of capital just from the get-go, people would have seen us also develop and reach the market much more quickly.”
Lukasiewicz reveals that the company is beginning to gather feedback from beta users, enabling it to guide the direction of development with greater precision.
“There are a high proportion of people on Wall Street making commitments to invest in this round,” said Lukasiewicz, adding that one of the goals in his approach was to bring new investors into the fold.
He is looking for all commitments to be finalised by this Friday (29th November).
Featured image: Mopic / Shutterstock