South Korea’s top Bitcoin exchange secures $3M investment to build an entire bitcoin ecosystem

This article is republished with permission from our friends at beSUCCESS.

Korbit, Korea’s leading Bitcoin exchange, wallet and merchant processor, has just closed a US$3 million series A funding round led by SoftBank Ventures Korea. Pantera Capital led the round from the US, with participation from BAM Ventures and previous investors Bitcoin Opportunity Corp, Tim Draper, Pietro Dova and initial investor Strong Ventures.

Korbit launched their Bitcoin exchange last year and have now added two new Bitcoin services and aim to continue building the Bitcoin ecosystem in Korea. Its series A round will secure the company’s finances for at least two years, allowing for greater focus on stabilizing Korbit’s core services and maintaining keen attention to quality to woo enterprise clients and leverage new opportunities.

New Services

The Korbit Merchant processor is a payments module that merchants can add to their online or offline store that automatically converts bitcoins to Korean won, allowing for easy bitcoin payment integration. Currently they have 400 live accounts accounts open in Korea, with many payments coming from international customers. CEO of Korbit Tony Lyu mentioned there was a “good mix of high value and small transactions.” He expects that for the emerging machine-to-machine communication and devices that utilize internet-of-things connectivity, bitcoin payment systems like Korbit’s wallet make a lot of sense. “Machines can’t open a bank account,” he explained, “but they can pay other machines.”

Korbit’s other new service, a Bitcoin Wallet, is used by consumers to send, receive, and save bitcoin.

Lyu said, “No one else in Korea was creating the wallet or merchant processor, so in order to fulfill the potential of Bitcoin, we had to do it.” And while Korbit’s reach is currently limited to Korea, he said, “We are beginning to look at global services as well. We are beginning to consider the global potential of our financial products. Our strategy is to be opportunistic in terms of global opportunities.”

Tony says he created Korbit because he believes Bitcoin has huge potential to add value to the finance industry. He explained there was no single product or service that was planned as the focal point. Instead, he felt a need to kick start the whole industry in Korea, and decided that the first service required for this was an exchange that allowed users to actually get their hands on bitcoin. The next stage was to open up the market so consumers could start making bitcoin payments (the Merchant Processor and Wallet). Tony mentioned that Korea is now a global leader for Bitcoin usage, as Koreans have a history of using virtual currencies.

Why the American investors?

As to why US investors are still maintaining such a strong interest in Korbit, “Korea is a potentially big bitcoin economy, beyond bitcoin adoption and digital currencies. Our investors have made a double bet, both on the market potential in Korea, and on our team’s ability to deliver on the potential of Bitcoin in Korea and beyond,” Lyu said. “We have also demonstrated that we can deliver on our aims.”

SoftBank Ventures Korea Partner Kangjoon Ryan Lee remarked, “The costs and security issues arising from the reliance on financial intermediaries for credit guarantees has been mitigated through Bitcoin’s technological innovation. Bitcoin provides big advantages in terms of cost savings and ease of use compared to traditional currencies and credit cards. I expect Bitcoin to create meaningful markets in payments and international remittance. Going forward, Bitcoin can play a role in wider variety of industries, for example enabling machine-to-machine transactions or acting as a platform for smart contracts.”

Dan Morehead, CEO of Pantera Capital, remarked, “South Korea has a booming e-commerce market and was an early adopter of virtual goods. The government supports innovation and even the banking foundation is invested in Korbit.”

Korbit started the world’s first Bitcoin-Korean Won exchange in April 2013. It previously raised $600,000 mainly from angel investors in Silicon Valley such as Tim Draper, Naval Ravikant and David Lee. Korbit is comprised of professionals from leading firms such as IDEO, UBS, Samsung Electronics, Microsoft and the Korea Exchange.