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Devign Lab has closed a $ 200,000 funding round that it will use to build a suite of applications including a peer-to-peer marketplace and merchant payment tools for the Korean market.
K Cube Ventures, a Korean venture capital firm chaired by Brian Kim, one of the country’s most successful internet entrepreneurs, provided the investment. Kim helped launch KakaoTalk, a popular mobile chat application that had 140 million users last year. This is K Cube’s first bitcoin investment.
Devign Lab has created a peer-to-peer marketplace called Coinone. The marketplace allows users to trade for free with an order book updated in real time.
Company chief executive Myunghun Cha said Korean bitcoin startups could continue to see strong interest from venture capital firms due to the country’s consumer tech expertise.
Cha said:
“Korea has optimal conditions for bitcoin. Smartphone [penetration] the rate is the highest in the world and the Internet population is too [among] the higher levels. Furthermore, Koreans are the fastest responders to the new technology, which is why many global companies are using the Korean market as a test bed. “
Round brings total investment in bitcoin startups in the country to $ 7.1 million in three companies, according to CoinDesk’s bitcoin venture capital tracker
Free model
Cha said Devign Lab’s goal will be to build its user base by offering free transactions on Coinone, with revenue coming from future applications built on the platform. One such application is a merchant tools platform called Coinpay.
Coinpay would be linked to Coinone and would allow merchants to easily accept bitcoin payments in exchange for South Korean won. The platform is still under development, Cha said, and is scheduled for release in November. He said no merchants have been registered yet.
Cha, however, is eager to talk about his technical credentials. He led a team of third-place hackers in the 2009 edition of Capture the Flag at DEFCON, the ultimate hacking convention. Competition involves securing or hacking a machine on an isolated network.
He competed in the final stages of that competition in 2011 and 2012.
Booming environment for investments
Devign Lab’s funding round comes in the wake of funding announcements from local rival Coinplug, a “ universal ” platform provider that operates an exchange, merchant payment instruments and distributes bitcoin ATMs. Coinplug raised $ 2.5 million in a new round this week that included Tim Draper and the venture capital arm of financial services giant Mirae Asset.
Coinplug caters to younger consumers who don’t qualify for credit cards with prepaid bitcoin credit cards that will be distributed nationwide later this month, its chief executive said.
Another company, Korbit, which also provides a universal platform, closed a $ 3 million Series A round in August from a number of pedigreed investors in financial markets, including Pantera Capital, Softbank Ventures Korea, Bitcoin Opportunity. Corp by Barry Silbert and Tim Draper.
Korbit claims to have 25,000 users and 400 merchants on its platform and has big brands like Nescafe among its users.
High-tech sophistication
Cha of Devign Lab also attributed the growing interest of investors in the space to favorable local technology infrastructures.
Korea ranks second in global smartphone penetration, behind the United Arab Emirates, according to research commissioned by Google. Korea has among the largest internet-connected populations on Earth, with 41 million internet users, ranking 12th in the world rankings in 2012.
Cha admitted that using bitcoin is not yet a traditional business in Korea, although he pointed out that this has provided startups as its ample room for growth.
“The current bitcoin market in Korea is small, considering its high potential. That’s why bitcoin startups in Korea can raise good funding [rounds], “He said.
Images via Coinone; Shutterstock
