Zebpay raises $ 1 million to develop bitcoin technology

MUMBAI; Ahmedabad-based startup Zebpay has raised $1-million (around Rs 6 crore) funding in order to promote bitcoins in India, even if the virtual currency is yet to get direct support from regulators across the globe, including the Reserve Bank of India.

In an exclusive to ET, the company said Arjun Handa, chief managing director of Claris Life Sciences, and Amit Jindal, managing director of Jindal Worldwide, were the two major investors, who personally invested around Rs 3 crore and Rs 1crore, respectively.

Nagendra Chaudhary, chairman at Jaipur-based Triangle Engineering, has invested another Rs 1 crore. There are a few other investors as well.

A part of the funding will be used to develop the blockchain technology, which is used to record bitcoin transactions in a secured manner. Incidentally, RBI has in the latest financial stability report, endorsed the potential of 'blockchain' as a future mode of technology for financial transactions.

"The environment in India for cryptocurrency is extremely positive and we are planning to utilise the amount to promote bitcoins as a reliable currency and investment option, enlist more e-vouchers on our mobile platform with a target to expand our user base from 25,000 to around one lakh within the next one year and ultimately become a bitcoin payment gateway ," Zebpay cofounder Saurabh Aggarwal told ET.

Aggarwal said a significant part of the funding would be going into setting up of a dedicated blockchain laboratory. This could enable the company to leverage the power of blockchain to innovate authentication and authorisation of transactions.

Amit Jindal, who had pumped Rs 75 lakh in the previous round in ' of funding for Zebpay, said awareness about bitcoins in India is extremely low. "However, it is still an attractive investment destination because one or two years down the line, the prospect of cryptocurrency is promising," he said.

Bitcoin is a form of a virtual currency which operates through a complex chain of encryption independent of a central regulator.

However, because there is a chance of cryptocurrencies being used as a mode of transaction for illegal activities, it may not be easily accepted by regulators.

In its 2015 financial stability report on disruptions in financial technology, RBI identified the importance of 'private blockchains', which have the potential of transforming the functioning of back offices of banks and increasing the speed of payments. "With its potential to fight counterfeiting, the blockchain is likely to bring about a major transformation in the functioning of financial markets, collateral identification and payments systems," the bank said.