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Coinseed

Micro-investment platform that allows users to invest in select crypto's

78%

Investors

54

Time to Invest

Security Offered

Convertible Note

Minimum Investment: $100

  • Cumulative trade volume reached $6.6 million in October 2018

  • Over 4,100 monthly active users

  • $1.7 million user deposits since inception

  • The company generated over $127,000 in its first 11 months

Terms

Security Type: Crowd Note

Round Size: Min: $25,000 Max: $107,000

Valuation Cap: $5,000,000

Conversion Provisions:  In connection with equity financing of at least $1,000,000, the Company has the option to convert the Crowd Note into shares of non-voting preferred stock (Conversion Shares) at a price based on the lower of (A) the price paid per share for Preferred Stock by investors in the Qualified Equity Financing or (B) the price paid per share paid on a $5 million valuation cap. Please refer to the Crowd Note for a complete description of the terms of the Crowd Note, including the conversion provisions.

Overview

Opportunity

In 2017 alone, the total number of cryptocurrencies increased from 617 to 1,335.i So far in 2018 the number of cryptocurrencies has continued to rise with an average of 93 Initial Coin Offerings (ICOs) per month.ii Between January 2017 and September 2018, the market capitalization of cryptocurrencies grew more than 1,000%, from $18 billion to over $200 billion, while the daily volume of cryptocurrency exchanges reached more than $13.6 billion.iii As of the end of November 2018, the market capitalization of cryptocurrencies is roughly $134 billion.iv With thousands of tradable options on the market, cryptocurrency investing can be a complicated process for the average investor. Knowing where and how to invest can be a complicated process that involves digital wallets, exchanges, passphrases, and other security requirements.

Founded in 2017, Coinseed has developed an easy-to-use mobile app for secure micro-investments in cryptocurrencies or simulated trading. The mobile app is available on Android and iOS devices and aims to make it easy, automated, and fun to invest small amounts in individual cryptocurrencies or a portfolio of select tokens.

Press

Product

Coinseed allows users to connect their debit or credit cards and invest spare change into a portfolio of select cryptocurrencies. Currently, users are able to create their own unique portfolio with 13 cryptocurrencies: Bitcoin, Bitcoin Cash, Ethereum, Ripple, Litecoin, Cardano, Dash, Monero, ZCash, Ethereum Classic, NEO, DogeCoin, and Digibyte. Users can choose to allocate across multiple tokens or invest in just one.

Round-Ups

Round up daily card charges on to the nearest dollar. Once the total amount reaches $5, the app will withdraw the amount and invest it according to the user’s portfolio.

Recurring Investments

Set up a daily automatic investment of $0.50 and $5.00

One-Time Investments

Invest as little as $5 one-off deposits

The current deposit limit is $50 per day, $1,000 per (rolling) month, and $5,000 per (rolling) year for all deposits combined. Coinseed also offers an automatic rebalancing. Users may withdraw their funds at any time, but the maximum daily withdrawal amount is $1,000. For security and regulatory reasons, Coinseed does not allow users to withdraw actual cryptocurrencies. All cryptocurrencies will be sold and withdrawals are made in U.S. dollars.

Crypto Back – Cash back rewards program

Coinseed recently launched a cash back program where users can receive cash back for purchases made at some of their favorite stores and brands. A percentage of the amount spent will be returned to the user in the form of Coinseed reward points. The reward points can be redeemed for U.S. dollars or made as investment in the user’s crypto portfolio. The percentage of cash back varies between merchants. Current retailers where users can earn cash back include Amazon, eBay, Walmart, Microsoft, Walgreens, Ann Taylor, LOFT, and more. Users that have enabled auto-investing can earn more money back from the premium list of companies which includes Uber, Netflix, Starbucks, and 7-Eleven.v

Social Network

Coinseed offers a social channel through the app where users can see real-time investment activities and follow friends. Users may also post investment ideas to their friends and the Coinseed community for discussion. Users can choose to opt-out of the social network to hide their investment activities from the public.

Coinseed Play

Coinseed offers a simulation trading platform for users that would like to practice without risking real money. Users can enter weekly trading tournaments where the winner receives a cash prize.

Initial Coin Offering

Coinseed issued CSD tokens to raise funding from non-U.S. investors. The pre-sale of the token was held from December 20, 2017 through January 10, 2018. The main sale of the token was held from March 20, 2018 through May 20, 2018. Coinseed received Ethereum, Bitcoin, and Litecoin in exchange for CSD tokens. Coinseed raised a total of 233 Ethereum, 0.6 BTC and 15.8 LTC during the ICO. The total proceeds from the ICO were $141,410. Net proceeds after advertising and contractor expenses totaled $4,265.

In its initial token offering, the Company sold 10,000,000 CSD tokens. The Company has agreed to pay the CSD token holders, beginning May 1, 2018, on a pro rata basis, 50% of the revenue generated from monthly portfolio conversion fees. From May 2018 through October 2018, the Company generated approximately $32,300 from portfolio conversion fees.

Use of Proceeds

Coinseed plans to use a significant portion of the proceeds from this raise for marketing. The company plans on increasing its marketing expenditures in order to drive more users to its platform. The rest of the proceeds from this raise will be allocated to general working capital and third-party professional fees. The company also plans on hiring a CPA to assist with financials and tax compliance.

Business Model

Coinseed currently generates revenue by collecting a $1 monthly fee from users. The company also collect a 1% deposit fee on all user contributions. The company does not charge a commission on trades within the app, but it does seek to generate additional revenue through buy and sell price spreads that exist on all trade orders. The company currently uses Bittrex and Gemini exchanges for all trades.

Coinseed is currently only available in the United States. It originally launched internationally but had to pull back due to high cost of international credit card transactions. The Company is planning to expand to international markets again if it can find cheaper processing alternatives for international users.

User Traction

As of November 2018, the company had 4,100 monthly active users. Since inception and through October 2018, users’ deposits have totaled $1,718,742. In Q3 2018, users deposited $533,124 in the app, up from $418,054 in Q1 2018.

Since inception, $6,670,168 worth of cryptocurrency has been traded by users in the app. In Q3 2018, the platform’s cumulative trade volume reached $2,953,569, up from $460,332 in Q1 2018 and $627,968 in Q2 2018. In October 2018, the company had its largest monthly trade volume, reaching $2,408,484.

Historical Financials

Coinseed began generating revenue in December 2017. Through October 2018, the company has generated $127,335. Year to date as of October 2018, the company has generated $119,217. 54% of the revenue is generated from the monthly fee and deposit fee while the remaining 46% is generated through trade price spreads.

As of October 2018, Coinseed has incurred $166,145 in expenses since inception. Cost of sales has accounted for 69% of the total expenses, or $114,757. Cost of sales is primarily from partnership fees to the company’s third-party payment processor and another partner that provides transaction information. Advertising is the next largest expense, having accounted for 20% ($32,438) of total expenses, followed by legal expenses that have accounted for 5% ($9,000). Expenses spiked in June 2018 due to an increase in advertising expenses in order to drive more traffic to the app.

As of October 2018, Coinseed has incurred a net loss of $38,810 since inception. In Q3 2018, Coinseed incurred a net loss of $5,692, up from a net loss of $30,512 in Q2 2018.The company was profitable in September due to an increase in revenue from trade price spreads. The company saw a 71% increase in trade amounts from August to September.

Industry

As of September 2018, the total cryptocurrency market capitalization was valued at over $200 billion, up from $18 billion in January 2017 – a 1,011% increase. Further, the daily volume of cryptocurrency exchanges reached more than $13.5 billion.vi As of the end of November 2018, the market capitalization of cryptocurrencies is roughly $134 billion.vii According to a report by Satis Group, an ICO advisory firm, the trading volume of cryptocurrencies is expected to grow by 50% through 2019 and have a compound annual growth rate (CAGR) of 9% through 2028. Satis Group also predicts an increase in trading fee growth by as much as 50% in 2018, from $2.1 billion in 2017 to over $3 billion.viii

In the first half of 2018, global investments in fintech companies reached $57.9 billion across 875 deals, already exceeding the $38.1 billion raised in 2017. In the U.S., fintech companies received $14.2 billion in investments during the first half of 2018, including over $5 billion from venture capital firms. Quarterly venture capital investment reached a new high of over $3 billion in Q2 2018. Further, unlike the broader VC market, early stage fintech companies continued to attract capital, with five of the top ten deals in Q2 2018 going to seed- or early-stage companies.ix

Competitors

Circle: Circle, a global crypto finance company, released Circle Invest in 2018. The Circle Invest app allows investors to create a custodial account through which they can buy and sell a variety of digital currencies with investment minimums as low as $1.00.x Currently, the app is available for investors in all U.S. states except for Minnesota, Hawaii, and Wyoming.xi As of May 2018, it supported trading in selling Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Ethereum Classic (ETC), Litecoin (LTC), Zcash (ZEC), Monero (XMR), EOS (EOS), Stellar (XLM), OX (ZRX), Qtum (QTUM), and Basic Attention Token (BAT).xii

Crumbs: Crumbs is a micro-investing app that rounds up the spare change from everyday debit and credit purchases and invests it into a user-selected portfolio of cryptocurrencies. Users can invest based off round ups, weekly or monthly recurring investments, or one-time investments. Crumbs offers several cryptocurrencies in which to invest including Bitcoin (BTC), Bitcoin Cash (BCH), Metal (MTL), Ethereum (ETH), Ethereum Classic (ETC), Ripple (XRP), EOS (EOS), Litecoin (LTC), Stellar (XLM), Dash (DASH), Monero (XMR), Z Cash (ZEC), 0x (ZRX), and Basic Attention Token (BAT).xiii Crumbs announced that it was being acquired by Metal (MTL), a blockchain-based payments and rewards company in May 2018 for an undisclosed amount.xiv

Stash: Founded in 2015, Stash is a financial services company that offers a mobile app for micro-investing services, retirement accounts, custodial investing, and more. The Stash Invest app is geared toward first-time or inexperienced investors who want to invest in small increments. Stash charges a $1 advisory fee per month for accounts under $5,000, and a yearly advisory fee of 0.25% (.0208% per month) for accounts over $5,000.xv Stash does not charge a fee for buying and selling investments or transferring money in and out of accounts. As of February 2018, the company claimed to have 1.7 million clients, five million subscribers, and was adding 40,000 new clients each week. In February 2018, the company raised a $37.5 million Series D funding round led by Union Square Ventures. Existing investors include Breyer Capital, Coatue Management, and Goodwater Capital, amongst others.xvi

Acorns: Founded in 2012, Acorns is a micro-investing app that enables users to set aside and invest spare change by linking their credit or debit card and a checking account. Acorns allows customers to automatically round up daily purchases to the nearest dollar and invest the spare change in a low-cost, diversified portfolio of exchange-traded funds. It also has a rewards program with select retailers called Found Money. The basic “spare change” service costs $1 per month. Users can also add IRA account services (Acorns Later) for a total of $2 per month for both features.xvii Acorns claims to have roughly 3.5 million customers with the average monthly investment between $50 to $60.xviii In May 2018, Acorns raised a $50 million fundraising round led by BlackRock.xix

Robinhood: Founded in 2013, the Robinhood mobile app allows individuals to invest in publicly traded companies and exchange-traded funds without paying a commission. In 2018, Robinhood began offering cryptocurrency trading. Robinhood Crypto gives users access to cryptocurrency market data and the ability to create price alerts for a total of 16 coins, as well as buy and sell six of those coins. Currently, this service is offered to customers in 19 U.S. states.xx The company generates revenue from interest earned on customers’ cash balances and margin lending.xxi As of May 2018, the company claimed to have over 4 million users and had passed $150 billion in total transaction volume.xxii Robinhood has raised $539 million to date from investors including DST Global, Iconiq, Kleiner Perkins, Sequoia, and Capital G.xxiii

Team

Del Davaasambuu

Founder & CEO

Prior to Coinseed, Del founded MyEtherShop and Tryclub. MyEtherShop allows users to make purchases from Amazon using Ethereum in order to improve the liquidity of Ethereum. Del studied physics at Meiji University in Japan.

Sukhbat Lkhagvadorj

Founder & CFO

While co-founding Coinseed, Sukhbat also works as a Data Analytics Consultant at DAS42. Before that, he was an Associate Analyst at NERA Economic Consulting. Sukhbat graduated from the Wesleyan University with a B.S. in Mathematics and Economics

Discussion

Endnotes

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