blockchain: the wave of funding continues for local crypto companies

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Investors are lining up for companies in India’s cryptocurrency and blockchain industry.

Total risk funding in domestic crypto and blockchain startups reached $ 587.16 million as of October 17 of this year, up from $ 37 million the year before, the highest on record, according to data shared with AND by industry tracker Tracxn.

Most of the capital came from international investors keen to take advantage of India’s large customer base, as they supported companies with significant traction, industry players said.

We are in a macro bull market rally. There is a lot of capital on the sidelines for high traction companies. There is also a lot of liquidity; for example, Coinbase’s listing in April generated new wealth, which is looking for new places to deploy, said Joel John, an investor at digital asset venture capital firm Ledgerprime.

The crypto exchange platforms CoinDCX and Coinswitch Kuber – the two new crypto unicorns in India – alone have garnered nearly 60% of the capital raised this year.

Indian investors are also starting to formulate plans for dedicated crypto funds and experiment with some investments. Industry sources have said that a few VCs are in the process of setting up India-focused blockchain and crypto funds that will have a corpus size of $ 15-50 million.

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Elevation Capital, which has supported startups like Paytm and Swiggy, is actively deploying in crypto and blockchain this year. It has entered into several deals in the areas of crypto investing, non-fungible tokens (NFTs) and gaming, and decentralized finance, a spokesperson said. It also has a dedicated team and group of experts working on cryptography and seeks to continue to be active in this space. ETtech This year Sequoia India doubled its investment in CoinSwitch Kuber and participated in a round and invested in a crypto Coinshift cash management platform.

John of Ledgerprime said bullish international investors are not reckless and make calculated bets exposing a relatively small portion of their overall portfolio.

For example, Silicon Valley venture capital fund Andreessen Horowitz recently broke into India by injecting $ 80 million into crypto platform CoinSwitch Kuber for a valuation of $ 1.9 billion. The company manages a Crypto Fund III with a size of approximately $ 2.2 billion.

Retail and institutional buyers have also joined the crypto industry in droves.

ETtech India has become one of the fastest growing cryptocurrency markets in the world, according to a recent report from Chainanalysis, a New York-based blockchain data platform.

Large institutional-sized transfers over $ 10 million worth of cryptocurrency account for 42% of transactions sent from addresses based in India compared to 28% for Pakistan and 29% for Vietnam, he said. These numbers suggest that Indian cryptocurrency investors are part of larger and more sophisticated organizations.

The hike came amid regulatory flow in India and discussions about a possible ban earlier this year. However, there were several positive signals from the government that diverted the conversation from a ban.

Compared to nine months ago, we now have several Indian crypto unicorns and massive traction for Web 3.0 in the Indian tech sphere, Balaji Srinivasan, former chief technology officer of global crypto major Coinbase, told ET.

I see Web 3.0 becoming as central to Indian technology as Web 2.0 was to American technology. Web 3.0 is the way technology leaves Silicon Valley and puts India and everyone on an equal footing. This is an opportunity for India to overtake all the legacy tech players with web 3 versions of social media, messaging and finance.

Web 3.0 refers to the next generation of Internet services for websites and applications.

Tanvi Ratna, chief executive of Policy 4.0 think tank, said 2021 marked a huge shift in terms of industry maturity.

The main reason we have seen growth in the crypto industry is that there was no ban in March that was so close to happening, she said.

The government has also been positive lately and the fund is looking for outstanding entrepreneurs who build projects that solve deep problems, said Pratik Poddar, director of Nexus Venture Partners.

The technology is new and the existing framework cannot be applied here. But there have been some positive signs overall. So it makes sense for investors to invest and also help regulators create the right framework, Poddar said.

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