Koo parent Bombinate’s Chinese investor on way out
NEW DELHI: The Chinese investor in the parent firm of Koo, India’s answer to Twitter, is on its way out after other investors have pledged to buy out its 9% stake, Koo’s co-founder and chief executive Aprameya Radhakrishna said.
Koo, which caught public attention after the Indian government’s tussle with Twitter over the removal of inflammatory contents, has crossed over 3 million downloads with about a million active users.
Koo’s investors include Accel Partners, 3one4 Capital, Blume Ventures, and Kalaari Capital. Additionally, global venture capital firm, Shunwei, is also an investor in Bombinate Technologies, the parent of Koo.
Shunwei Capital, which is led by a partnership team that includes people of Chinese origin, had invested in the earlier product of Bombinate, an app called Vokal.
Since Bombinate has pivoted its primary business and focused on Koo, Shunwei has committed to exiting the company, he said.
“Back in 2018, when we had just started with question-answer app Vokal, we got interest from Shunwei, which was a prolific Chinese investor in the content space,” Radhakrishna said in an interview.
Shunwei had invested across multiple companies in India and Bombinate was one of them.
“Over 2018 to now, Koo was started as an experiment and it gained traction. We had no idea, this will be a national sentiment product and that we should not take money other than Indian or something that is welcome,” he said. “Nobody really questions at Vokal. It’s about Koo.” He said when the investment happened, Koo didn’t exist.
“Koo started getting traction recently. And the latest round of investment ($4.1 million in Bombinate) was led by 3one4 Capital and Shunwei hasn’t participated. We actually made sure that there is no more participation from Chinese investors,” he said.
Shunwei, he said, is on its way out.
“Exits are a matter of timing. You need to have the interest to buy out existing shareholders as well,” he said. “First priority was to infuse capital into the company. And there will be more interest we will request Shunwei to exit. We now have enough interest to buy them out. They have also agreed to exit and this is in the process.” He did not say who would buy out Shunwei. Shunwei Capital, he said, held about 9% interest in Bombinate. Due to the increased restrictions on Chinese investors in India, the exit procedure was working through the required checks and clarifications before being completed. The company expects this exit transaction to be concluded very soon, pending the necessary compliance and governance procedures.
He said Koo, through which Indian language users can communicate in their own language, houses all data and associated services in India.
Koo is available in several Indian languages including Hindi, Kannada, Tamil, Telugu, Gujarati, and Marathi. “Koo is an Indian registered company with Indian founders,” he said. Koo has so far raised around $4.1 million from investors including Infosys veteran Mohandas Pai’s 3one4 Capital, Kalaari Capital, and Blume Ventures.
NEW DELHI: An overarching ban on private cryptocurrencies in India might lead investors, who poured large sums of capital into crypto assets over the last few years, to take their business to underground markets, said industry experts.
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 is scheduled to be tabled in the ongoing budget session of Parliament. The bill seeks to prohibit private cryptocurrencies in India. “The fact is crypto runs on the internet. The control does not rest with one person, one organization, or one country. Hence, it is not possible to ban crypto trading,” said Kumar Gaurav, founder and chief executive of online banking platform Cashaa.
Gaurav said the government can ban the “legitimate use of crypto”, which will eventually lead to international trading or the rise of the black market in India. “People might still trade but it will become difficult to track within the country.”
“When the banking ban came in the last time, people were stuck. Exchanges were asking people to withdraw their money, but investors were holding on, hoping to take their assets offshore,” said a senior industry professional, requesting anonymity.
He was referring to the Reserve Bank of India’s (RBI) ban on cryptocurrencies, which was later quashed by the Supreme Court in March 2020.
News reports said the government will give 90 days or more for people to sell their crypto assets, but this may not be feasible either. According to executives from two top crypto exchanges in India, the ban would create an environment where there are many sellers but no buyers. This will further drive people towards underground markets, or to take their money offshore.
The industry professional quoted above said crypto exchanges had hundreds of crores stuck in bank accounts when a ban was enforced last time. “There is a chance that people will move offshore, to foreign exchanges.”
“There’s a large possibility (of underground markets rising),” said Nishcal Shetty, founder of Wazirx, the largest crypto exchange in the world.