The archive · Money & Fintech · Product decision · 2017–2018
CoinTracker bets automatic tracking makes crypto taxes painless
Two crypto hobbyists turned manual spreadsheets into a YC-backed tracker valuing $200M in assets, then raised a $1.5M seed off tax season.
CoinTracker
What the business is
CoinTracker syncs a user's crypto across wallet addresses and the top 14 exchange APIs to value the portfolio and compute IRS-ready capital-gains reports under FIFO, LIFO or HIFO accounting.
Starting capital：$1.5M seed, April 2018, led by Initialized Capital
How it started
Chandan Lodha, a former Google X product manager, and Jon Lerner, a former TextNow CTO, started CoinTracker to track their own crypto-investing hobby. Having bought and used most of the tracking services on the market, they found almost every one relied on manual data entry, which broke once crypto-to-crypto trades and price changes entered the picture. When they realized casual and serious investors alike shared the problem, they made it their main focus and went through Y Combinator's winter 2018 cohort.
What happened
In April 2018 CoinTracker announced a $1.5M seed round led by Initialized Capital, an early investor in Coinbase, with Y Combinator and angels including Protocol Labs CEO Juan Benet and Gmail creator Paul Buchheit. By then the service was tracking $200M in crypto assets. The basic tracking stayed free; users paid from $49 to $999 a year for tax features that compute capital gains using FIFO, LIFO or HIFO accounting. The money went toward developers to handle the 'large number' of user requests, and Lodha said future services could include trading via exchanges inside the app.
No ending yet — it is still running.
Background
CoinTracker is a San Francisco startup that automatically tracks cryptocurrency portfolios across wallets and exchanges, aimed at everyone from hobbyists to serious investors. Its bet was that people would stop keeping manual spreadsheets once a tool could assemble the whole picture by itself, and that US tax season would make that automation worth paying for.
The service started from the founders' own pain: Lodha, a former Google X product manager, and Lerner, a former TextNow CTO, wanted to track their crypto-investing hobby and found the existing services and apps all demanded manual data entry. That failed once crypto-to-crypto trades and price changes were involved. Seeing the same problem in many other people, they made it their focus and joined Y Combinator's winter 2018 class.
By April 2018 CoinTracker was tracking $200M in crypto assets and announced a $1.5M seed round led by Initialized Capital, with Y Combinator and angels such as Juan Benet and Paul Buchheit participating. The service pulls public wallet data and API keys from the top 14 exchanges, uses a transfer-matching algorithm for decentralized-exchange trades, and computes capital-gains reports under FIFO, LIFO or HIFO accounting. The basic tracker is free; advanced tax features run from $49 to $999 a year.
Lodha attributed early success to UX: making the tool easy for mainstream people rather than expert cryptography users. The round was timed to US tax season, when gains from crypto's breakout 2017 year were arriving in filings, and the plan was to keep hiring developers and eventually add in-app trading.
What has to be true
- The founders were users: they hit the manual-entry wall while tracking their own holdings, so the pain was concrete and shared.
- Automating wallet addresses, exchange APIs and decentralized-exchange trades produced a picture a spreadsheet could not practically maintain.
- Tax season made the value explicit: capital-gains reports priced at $49–$999 gave the free tool a natural paid tier.
- Timing the announcement for April and launching from YC gave the seed round news hooks and reach.
What can be applied
Automate the data capture everyone hates, then monetize the compliance output the IRS forces: tax season gave a free tracking tool a natural paid tier.
Aftermath
As of 2018-04-10 CoinTracker was live with a free base tier, tracking $200M in crypto assets, with the $1.5M seed earmarked for engineering and in-app trading on the roadmap. The source records no revenue, valuation or later milestones, so this entry stops at the seed-stage company rather than an ending.
Sources
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