[YS Exclusive] Crypto startup BitSave bags Pre-Series A funding from Leo Capital

Indian crypto exchanges today offer over 100 tokens, presenting an overwhelming array of options for new investors learning to navigate the digital asset class. These options, ranging from Bitcoin to memecoins, can leave beginners uncertain about how and where to invest. 

Preempting this challenge in 2022, Zakhil Suresh, Sajal Sharma, Asif Kattakath, and Vishnu Karthik, recognised an opportunity to simplify crypto investing. BitSave’s product is tailored for passive, long-term investors through a systematic investment plan (SIP). 

Today, the company raised an undisclosed amount in a pre-Series A funding round from Singapore-based venture capital firm, Leo Capital. The newly raised capital will be used towards licensing, product improvement, and brand awareness initiatives. 

Launched officially in 2023, the company gives investors a simple and consistent way to invest in digital asset classes through monthly SIPs. Its products are designed to cushion the intense volatility of the asset classes and help investors diversify their portfolios. 

“We have simplified the whole process to a level where you just have to spend 10 seconds a month to do the whole investment,” Suresh, CEO at BitSave tells YourStory. 

Brokerage to BitSave: The journey

The beginning of BitSave can be traced back to the Indian crypto landscape of 2017, when the country saw its first multi-asset open order book crypto exchange: Koinex. 

At the time, Suresh, Kattakath, and Karthik had set up a small brokerage to help people buy and sell Ethereum. When Koinex began looking for liquidity providers, they began to work closely with the team in Mumbai. 

“Our relationship grew very quickly and we ended up helping them (Koinex) with a bunch of things, and in a matter of three or four months, Koinex went on to become India's largest exchange, so that is when me and Asif, we thought it's a good time to join the company, get more exposure of what is going on,” Suresh says. 

However, in 2019, Koinex shut down its operations after the Reserve Bank of India (RBI) issued a circular prohibiting entities from dealing with virtual currencies including cryptocurrency. 

“I think apart from the founders, both of us (Suresh and Kattakath) have been the people who have seen that journey right from day zero to unfortunately the end.”

But, this experience provided the team with a unique understanding of the landscape, and they realised that the number of tokens in exchanges are only going to increase with time. Koinex had five assets when it started, and by the time it had closed, it was offering almost 40-50 assets. By 2020, most exchanges had over 100 tokens. 

They also observed that new investors were unable to make informed decisions because of the large array of options on exchanges. 

“One, people lost money because they kept buying based on whatever other people were saying. Or they ended up not investing because it's so intimidating,” Suresh notes. 

In 2023, the company put out its first version on the App store and tested it out for a few months, before opening the platform to a wider range of people in September. Today, the company has about 520 active users and manages $450,000 in assets. 

While the company is creating a global product, today, 90% of its users are from India. 

BitSave’s guide to simplifying crypto investments 

The company initially spent some time trying to figure out the right index to curate their product around, and after much contemplation zeroed in on Bloomberg’s Galaxy Crypto Index (BGCI), which is designed to measure the performance of the largest crypto assets in terms of its market capitalisation. 

“We realised that Bloomberg has a crypto index, Nasdaq has a crypto index, S&P has a crypto index. But, we realised Bloomberg's crypto index is a bit superior from a portfolio perspective. When I say portfolio perspective, it's not really like a typical vanilla index where you just pick the top 10, top 15 and then create an index out of it. They bring in their research angle. So it's more suited for long term portfolios. So they never had a Luna or an FTX as part of the index even though those were like top 10, top 15 projects,” Suresh says. 

BitSave’s first product is its Bloomberg-licensed product that tracks the BGCI. Its current components are Bitcoin (BTC), Ethereum (ETH), Solana (SOL), Polkadot (DOT), Litecoin (LTC), Avalanche (AVAX), Uniswap (UNI), Near Protocol (NEAR), Bitcoin Cash (BCH), and Chainlink (LINK). 

The company’s second product is a basket of BTC, ETH and gold. 

“We thought that not everyone is comfortable with the large drawdowns of crypto. Because crypto historically has like 70-80% drawdown. So because of that, we thought, okay, why not add some gold to the portfolio? Since our target audience is mostly first time investors, it would be a bit more comfortable for them. So we took BTC ETH and added a bit of gold to it. What this does is that it reduces the overall risk without really compromising on the return,” Suresh explains. 

BitSave’s third product is a Bitcoin product and provides investors with an easy way to gain exposure to the asset class which is now trading at an all-time high in recent weeks. 

The company’s revenue model is based on a standard management fee structure where it charges 1.5% of what the user holds for its index and hybrid product and 0.95% for its Bitcoin product. 

Security and regulation

There are three ways crypto assets can be stored securely—one, self custody, where the user picks up a hardware or a software wallet and they have complete control over it, two, institutional custody, and three, using an exchange or a normal custodial audit service. 

BitSave uses institutional custody to protect its assets, inspired by the custodial service that provides traditional storage of mutual funds. Additionally, Suresh also highlights that the company has an off-balance sheet settlement, which means that the assets that its clients store is not part of its balance sheets. 

“They (users) are not creditors. We are just holding it on their behalf.”

Suresh believes that regulation is the responsibility of the entire crypto ecosystem—authorities, exchanges and users alike. 

“There are a bunch of constraints that we have as a country. Like one, majorly regarding capital flight. We are a country where money doesn't move freely. It's an extremely hard process to send money abroad, for whatever reasons. So from an RBI perspective, they know that something like this which they can't really control it,  it's of a cross-border nature. 

“There is a risk in terms of how maybe we've been sort of bypassing some of these guidelines in terms of moving money abroad. So, one way of tackling that is treating it as more like an asset or regulating it as an asset and not really as a currency. Like, we all have come to ground that that is how it's going to be.”

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When it comes to futures and options (F&O), there is a bit of responsibility on the platforms, Suresh notes. “what usually ends up happening is that there are these cycles and people come with unrealistic expectations. They become disappointed. A bunch of people lose money. So, what we are trying to do is to change this. To design the platform in a way where the odds of someone doing well in the long run sort of increases.”

The regulatory body’s fundamental duty is to protect investors so the regulations have to become stricter over time and structured in such a way that it protects people who do not understand the asset class through more disclosures, risk warnings and a risk profile scanner. “Nudges like this is how I think it should be,” Suresh adds. 

BitSave is in the process of finalising its Financial Intelligence Unit (FIU) certification and has submitted all related documents to the authority. What this means is that the company will have to follow the AML guidelines that help combat money laundering activities and other procedures that require financial institutions to identify,  report, and investigate suspicious transactions, including others. 

While the company is currently focused on the Indian market, it is also planning expansion to other Asian counties in 2025, it said in a statement. 

According to Ravi Srivastava, Partner, Leo Capital, the company is “well-positioned for scalable growth through a strategic blend of initiatives,” which includes geographical expansion, institutional partnerships such as engaging with wealth managers, family offices, among others that are seeking credible crypto partners, and enhanced product offerings. 

“Our investment in BitSave was driven by two key factors. First, the highly capable and experienced team behind BitSave brings a unique combination of expertise, professionalism, and a level-headed approach to building a sustainable business in a volatile space like crypto,” Srivastava told YourStory in a statement. 

“Second, we believe in the secular trend of crypto as an emerging asset class. Models and data consistently highlight the power of crypto in building resilient and outperforming portfolios. By offering exposure to this asset class as seamlessly and effortlessly as a mutual fund, with a focus on long-term growth, BitSave is perfectly positioned to tap into this trend,” he added.