Coins.

ph Investment Memo
Friday, November 21, 2014

Introduction

Coins.ph is the leading Bitcoin exchange in the Philippines. The team is cohesive, has Silicon Valley
experience, and is local to the country. The company has the largest exchange in the country, is
number two in e-commerce payment processing, and has expanded to become a top three
exchange in Thailand. Their platform is user-friendly and centers on an efficient remittance
product/model.

Market

The Philippines is an ideal Bitcoin foothold in that it enables disruptively low-fee remittances for a
country with one of the highest work emigration rates. In addition, 75 percent of Filipinos do not have
bank accounts, a typical problem Bitcoin remedies.

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The Philippines has a unique market with over 500,000 sellers using social media instead of Paypal
or major payment processing solutions. In addition, credit cards penetrate less than 3% of the
population.

Bitcoin is an empowering tool for emerging markets like these. Even though a very large percentage
of Filipinos lack access to traditional banking, about 40 million Filipinos have access to the Internet,
with mobile phone penetration reaching almost 100%. We expect Filipinos to leapfrog traditional
banking in pursuit of Bitcoin in that it is a better store of value relative to Filipino peso and a means
by which to more affordably remit money and more profitably engage in commerce.

The Philippines is the 3rd largest recipient country for remittances in the world, with an estimated $25
billion remitted yearly. The majority of these funds are sent to unbanked Filipinos. The only way to
collect this money is in-person at retail locations or Western Union, where consumers must pay an
average of 9% in fees. Bitcoin-powered remittance solutions are expected to lower remittance fees
to as low as 2-3%.

Team

Founders / Executive (3 persons, total payroll: $6k):

Ron Hose - CEO

• Founding partner at Innovation Endeavors, an early stage venture capital fund backed by Eric
Schmidt.
• Co-founder of tokbox, a video conferencing company that was acquired by Telefonica
• Bachelors and Masters degree in computer science from Cornell University

Runar Petursson - CTO

• Founder/CEO WFD (HFT trading over $9B/day)

• HFT Strategy Developer at MadisonTyler (nowVirtu Financial)
• BS, Computer Science UWF

Ryzpah Capicio - Compliance Officer (starting Jan 5th)

• Supervising SEC Accountant, Office of the General Accountant, Philippines Securities and
Exchange Commission.
• BS Accountancy, MBA Ateneo, CPA.

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Products

Exchanges

The company has the largest exchange in the Philippines, processing $1 million worth of bitcoin
volume per month.

The company launched an OTC exchange (Coins.co.th) in Thailand, where it ranks as one of the top
3 exchanges, averaging 300 BTC per month in volume.

Payment Processing

The company does payment processing for 2 of the 3 largest e-commerce merchants in the
Philippines. They have also developed an API that integrates with merchant apps.

The company recently partnered with MetroDeal, an Asia-based daily deals giant and the #2 e-
commerce website in the Philippines. It achieved an annual revenue of $18 million in 2012 and
projected to reach $20 million revenue in 2013.

The company has also partnered with CashCashPinoy, a top 200 website in the country.

Wallets & Infrastructure

The company launched their own wallets (instant loading) recently and have 10,000 wallet users,
1,000 of them active. The company launched an Android app for users to manage their funds and is
planning to launch an iOS version soon. The team has built a large physical network and developed

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an API, providing bitcoin ATM makers the ability to use the physical infrastructure to easily send
money anywhere within the Philippines.

Remittances

Remittances start off with their mobile app, and it takes 3 clicks to send money to the Philippines.

1. Cash in – Bitcoin Wallet (mobile)

2. Cash out

• 20+ major banks

• Cebuana Lhuillier, M Lhuillier, and other cash pick-up centers
• Door-to-door delivery w/LBC Pesopak, 2GO Quikcash
• Smart Money Card
• GCash
• Smart / TNT / Globe / TM / Sun Cellular load

Key Performance Indicators

A few notes on the graphs below:

• “Invoice” refers to merchant transactions. “Off-system” refers to transactions handled

manually.

• June bump in volume was due to a large one-off transaction.

• They are a market maker for most transactions, but the numbers below exclude the market
making activity on Bitstamp, etc. (i.e., "counted once").

• Thailand: Launched August 26th, but were trading before launch. The Thailand operation is a
one-person team right now with support standing by in case of scaling needs.

• November numbers are for the first 3 weeks only.

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Competition

Satoshi Citadel Industries is the only legitimate competitor in the Filipino Bitcoin space. The team is
not nearly as well-rounded. The company launched simultaneously in 6 verticals (exchange,
remittance, bills processor, payment gateway, bitcoin faucet, prepaid bitcoin cards), which is
problematic. Their exchange has 1/13 of the volume size of Coins.ph.

Coins.ph Advantage: The team is much more immersed and experienced. The company is focused,
already targeting large markets, and is farther along with their products. The company’s platform
has already scaled to separate Southeast Asian country (Thailand). The company has the most
volume by far of any exchange products in the region.

Banking & Regulations

Coins.ph has several bank accounts. As far as regulations go, the central bank of the Philippines
issued a warning to its consumers about the use of digital currencies. The bank listed a number of
concerns about the high volatility and lack of consumer protections, that come along with Bitcoin
use, as well as the absence of regulation imposed on businesses offering Bitcoin services. The
country’s lawmakers have not been quick to provide clarity as to how the local bitcoin ecosystem
should operate, despite the bank’s advisement in March.

Deal

Coins.ph has closed $1 million of a potential $1.5 million note capped at an $8 million valuation. They
have up to 90 days after the first close to fill the note maximum (Dec. 10 deadline), but have not
focused on raising more money since the first close, leaving the note open to only high-value,
strategic investors. Innovation Endeavors, Barry Silbert, and other angels are in this round.

In the next 6-12 months, they are focusing on wallet adoption and remittances.

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Recommendation

Pantera Capital invests $250,000 - $500,000 in this round, more incentive to invest closer to
$500,000 if any of our shareholders or co-investors are interested.

Final Observations

The investment into Coins.ph would fit our local exchange thesis. The investment also targets a
country with existing Bitcoin traction, a prime remittance market, and many more problems (e.g.,
unbanked) that Bitcoin remedies.

Coins.ph is the best bet in the Southeast Asian region. Innovation Endeavors and Barry Silbert took
great risk investing before the first close, as Coins.ph only had projections and product plans. In
contrast, we are coming into the deal with hard evidence that the team can execute. In only 2.5
months since their initial closing, Coins.ph has distributed 10,000 wallets, branched out to Thailand,
and has improved their remittance product greatly.

The long-term vision is to become the Coinbase of Southeast Asia, providing lending, investment,
and savings products. The company complements our portfolio well, with potential partnerships
between Bitstamp, BitAccess, Korbit, and ChangeCoin.

I am strongly convinced that an investment in Coins.ph is worthwhile. I am willing to travel to

the Philippines either the first or second week of December to conduct in-person due diligence
of the company, competitors, and customers, so that this deal is closed as soon as possible.