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Bengaluru-based online car rental startup Drivezy (formerly JustRide) has raised $5 million from its first round of initial coin offering (ICO), announced its CEO Ashwarya Singh.

Existing investors and high net worth individuals (HNIs) from Japan and Singapore participated in the round.

An Initial Coin Offering (ICO), also called as Initial Public Coin Offering (IPCO), is an unregulated means by which funds are raised for a new cryptocurrency venture. An ICO is used by startups to bypass the rigorous and regulated capital-raising process required by venture capitalists, angel investors or banks. In an ICO campaign, a percentage of the cryptocurrency is sold to early backers of the project in exchange for legal tender or other cryptocurrencies, but usually for Bitcoin.

Drivezy offered the ICO on the Ethereum blockchain.

In October 2017, Drivezy had announced that it is coming out with an private ICO to raise 17,625 ETH (~$5 million) of funds and for this the startup has partnered with Japanese payment firm Anypay.

In the ICO, Drivezy’s investors were allowed to purchase cryptographic tokens which entitle them to a share of revenue, generated by rental transactions on the platform. For the current round, the company sold close to 3 million tokens.

Drivezy will exchange the money, raised from the ICO route, into dollars via crypto currency exchanges in the US. The startup plans to use the money raised to add 800 cars and bikes to its platform.

For the purpose of offering the ICO, the startup also launched its own crypto coin named RentalCoins which will be used to pay for rides in the coming months, and to invest in shared vehicles operated by Drivezy.

Moreover, in October’17 the startup introduced bitcoin as a payment option for its rides but later discontinued it due to high-costs.

After this ICO, Drivezy plans to raise up to $15 million through multiple rounds of ICOs. Till date, it has raised around $15 million from the regulatory route — VCs and other investors. The startup had earlier raised $10 million in Series A round that was closed in October 2017, which saw participation from investors like Das Capital, Axan Ventures, CrowdWorks, IT-Farm, White Unicorn Ventures and others. Prior to that, it had raised $3 million in a bridge round led by Y Combinator Partners and Others. Notably, Drivezy was a part of Y Combinator summer 2016 batch.

An Indian startup planning an ICO raises a lot of eyebrows, especially considering the fact that virtual currencies operate in the grey area in India as they are still not legal here. However, unlike regulators in the US or China, Indian regulators have opted to largely remain silent on the issue. This is the reason that Drivezy has decided to launch its ICO in Japan and open it to accredited investors only as it wants to remain cautious if the Indian regulators someday decide to come up with tough regulations against cryptotokens.

While presenting the Union Budget, 2018, finance minister Arun Jaitley said crypto currencies are not legal tender in India.

Besides Drivezy, Bengaluru-based blockchain startup WandX launched its ICO in October’17 and had already raised $430,000 as on December’17.

Globally, there have been 234 ICOs in 2017 raising more than $3.6 billion, according to ICO listing website Coinschedule. Though the first ICO, by MasterCoin (now Omni), was in 2013, this investment vehicle has seen an uptick this year.

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