Serial entrepreneurs Edul Patel and Prince Arora along with Edul’s friends Rohit Goyal and Alankar Saxena set out to work on their belief that crypto will remain one of the largest asset classes in the world.
They are attempting to ‘democratise’ investment opportunities in cryptocurrencies through their startup Mudrex, which was launched in 2018. Simply put, it works as a ‘mutual fund investment’ layer for cryptos, providing simple and seamless investment products.
“Globally there is a focus on trading in cryptocurrencies, and while we have been introduced to crypto trading, there is little explanation on how to invest and make it grow, and that is what Mudrex aims to solve,” says Edul.
While Edul, Rohit, and Alankar are alumni of IIT Bombay, Prince is an alum of IIT Kanpur.
Edul Patel
The exchange that did not work
Originally, the four friends too started building a cryptocurrency exchange in 2018. They built the infrastructure, including the order matching engine and custody wallets.
“We had on-boarded our first 100 customers and were ready to launch but just a week before that, the RBI banned crypto trading in India,” says Edul.
This decision pushed the team to rethink everything and decided to focus on building a global product, rather than focus on India alone as crypto is a global asset.
They also realised that exchanges would become commoditised and businesses then will need to have massive scale. Lastly, automation was the only way you could trade and scale investing in crypto. But at the time, there were no companies building the infrastructure or tools to enable this.
Edul explains with a $2 trillion market cap, crypto is one of the fastest-growing asset classes today. However, there are some roadblocks to manual trading.
“Ask anyone who has done this manually and they will tell you about the long nights spent staring at the screen looking for an entry/exit. We saw an opportunity to build everything on top of the exchange — right from asset management to prime brokerage — and pivoted towards it,” explains Edul.
Building the new platform
The four began by building a no-code editor tool, which lets anyone create a trading algorithm. The beta version was launched in October 2018. By December, the startup got its first 100 users and also got selected for Y Combinator’s winter cohort of 2019.
While at YC, grew to 500 users. The founders say they learnt two key things during this time — both good and bad traders need help with investing, and building a business by selling a SaaS tool would not be the best utilisation of the product. The output of the tool, the algorithms were more valuable. Edul adds that Mudrex was in the best position to get distribution for it and monetise it.
This led the team to build a monetisation layer and a marketplace. The first version of the marketplace was launched in August 2019 and by December, it had 2,000 signups and a lot of feedback.
“We went back to the drawing board to iterate our strategy and launched version 2.0 of the marketplace in April 2020 and rebranded it to ‘Mudrex Invest’. Since then, there has been no looking back,” says Edul.
On Mudrex, traders create their own trading bot without any coding. The platform uses analytics and historical data to help them evaluate their bot’s strategy. At present, it hosts a 95-97 percent investor base with a 3-5 percent creator base that has grown organically.
The moats that set them apart
Cryptocurrency is clearly a hot topic in the startup ecosystem with players like WazirX, Giotuss, Unocoin, Coinbase, and CoinSwitch in the space. But while most of these focus on trading and act as exchanges, Mudrex wants to build a global base for investors.
Currently the metrics are growing for Mudrex. According to Edul, the startup drives volume, and there are traders who rely on the platform to build their business, investors who use the product to profit, and trading communities who earn through referrals.
“These partnerships follow Metcalf’s law and give the ‘network’ benefits. The more nodes in the network the more valuable the network is. Having said that, partnerships can be bought,” he explains.
The startup claims it has recorded over 25,000 signups, more than 2,000 investors, and $15+ million in AUM, and over 270 different products to invest in. Edul says that the algorithms collectively do over $200 million in trading every month.
Close to 80 percent of the revenue comes from the marketplace.
“We crossed $1 billion worth of trading volume as of April, 2021. We are growing at 40 percent month-over-month for the last 10 months now. Our growth in the last six months has been 10X and we achieved this with zero spends on marketing,” he adds.
Next steps and future
So far, Mudrex has raised $750,000 in pre-seed from Y Combinator, Better Capital, Woodstock Fund, and multiple crypto angels. At present, the startup is working on four major items —
- Mudrex Exchange — An end-to-end crypto trading and investing platform. Users will be able to buy, store, trade, and invest crypto on it. The team has already formed an integration with Binance.
- Crypto Indexes and thematic baskets — Mudrex is adding crypto indexes and token baskets to let user quickly invest in crypto themes. Most users who want to invest in crypto want to take directional bets in certain specific thematic areas like DeFi, Smartcontract, Web 3.0.
- Mudrex Capital — This would be dedicated to institutional investors, focused on asset management, providing bespoke products to HNIs, funds, and institutions. The minimum check size for this is $250,000.
- Investment as a service — Mudrex wants to provide investment options directly to exchanges, wallets, and liquidity sources as a service to let their users invest. At present, the pilot is underway, in integration with the European crypto exchange GokuMarket, with 100,000 users. There are five other integrations confirmed and 13 more in the pipeline.
“Our current AUM is approximately $10 million and we want to grow 20 times in the next 12 months. Now, we want to build strong distribution pipes and complementary products to create lasting moats. There is demand, which we have been unable to fulfil because of resource constraints. This is why most of our capital is going to be used for building a larger team,” says Edul.