On Friday, it was announced
that one of our portfolio companies, Coins.ph
, was acquired by Southeast Asia’s leading ride-hailing and payments company, Go-Jek
, in one of the largest tech acquisitions in the Philippines and the largest publicly disclosed acquisition for Go-Jek. Founded in 2014, Coins.ph is the market-leading mobile wallet in the Philippines with the vision that banking involves connecting customers directly with the financial services they need when they need it. The product provides first and foremost a mobile/digital wallet which enables a low-cost blockchain based remittance solution, peer-to-peer money transfer into the Philippines ($26 billion market, 3rd largest in the world). In addition, the product serves other use-cases such as bill payment, top-ups, and e-commerce to over 5,000,000 users, or one-tenth of the country’s population.
Pantera has achieved some of the largest acquisitions in the blockchain space already in Bitstamp
, and Korbit
, but this acquisition is special because when people ask me what use-case I am most excited about for the blockchain, it is bringing banking to the unbanked, and that is what Coins.ph is doing. The thesis for the investment was that the Philippines and Southeast Asia was an ideal geography to showcase how cryptocurrencies could enable banking for the unbanked and faster/cheaper remittances. I traveled to Manila to evaluate the market and the company, and these were the factors that made the investment compelling:
Market - 4 out of 10 Filipinos use Facebook, 2 out of 10 households are banked, and 1 out of 20 Filipinos own a credit card. For Southeast Asia’s 618 Million population, 40% are unbanked and there is 5% credit card penetration. $26 Billion of remittances are with the Philippines.
Solution - Coins.ph provides a great product and user experience to access cryptocurrencies and eventually just Philippine Pesos on the mobile device. On-boarding is more seamless and includes risk-based KYC. At the time, you would have to wait in line at the bank to perform even a same-bank transaction with another party, as there was no online-banking or venmo-equivalent. Coins.ph solves both domestic and international transactions with their product, and the blockchain provides instant, global cross-border settlement and access to a global network of fintech services. Filipino families could accept remittances through typical western union-type centers or even a network of ATMs through the company.
Team - The team is led by CEO Ron Hose, previously a founding partner at Innovation Endeavors, an early stage venture capital fund backed by Eric Schmidt. Ron was also the co-founder of TokBox, a consumer video conferencing company backed by Sequoia Capital, Bain Capital and Stanford University that was later acquired by Telefonica. Ron hired the top talent in the country but also used his network from VC and Silicon Valley to bring top international talent to move to Manila to work for him.
Regulations - Before making any investment in a foreign jurisdiction, we talk with lawyers and regulators in the region. I was impressed with my conversations and Ron’s efforts to work with existing regulations and to educate relevant parties. Coins.ph was the first company in Southeast Asia to be regulated as a Virtual Currency Exchange and Electric Money Issuer (e-wallet). Coins.ph was also the first virtual currency provider in the Philippines to be licensed by the Bangko Sentral ng Pilipinas (BSP) with a Virtual Currency Exchange license.
Pantera was one of the largest investors in the seed round in 2014 and also participated in a Series A round led by the Accion Frontier Inclusion Fund (Quona), Wavemaker Labs, and Kickstart Ventures that included Innovation Endeavors, Naspers, Digital Currency Group, Wavemaker Labs, Global Brain, BeeNext and Rebright Partners.
Instead of raising another round, Ron decided that the best path to scaling would be through an acquisition by Go-Jek. Go-Jek is an Indonesia company that is valued at $9 Billion and specializes in ride-hailing, logistics, and digital payments. Its overseas moves saw it enter Vietnam, Thailand, and Singapore. Philippines was named as another proposed destination, and Go-Jek has made the strategic decision of entering the country through fintech. Go-Jek and Coins.ph will partner to encourage a cashless society and to enhance access to financial services in the Philippines. That would mean that Go-Jek would look to expand Coins.ph’s suite of offerings into insurance and lending.