Crypto and Web3 startups in India attract funding despite massive sales in digital assets

Crypto and Web3 startups in India attract funding despite massive sales in digital assets

Crypto and Web3 startups raise funds in India despite massive sales in digital assetsWith the exception of Bitcoin, all cryptocurrencies, including Ether, Matic, Cardano and Dozecoin, have lost 50 to 90 percent of their value since the end of last year. Example: Chaitanya Dinesh Surpur

As Bitcoin prices, the world’s most actively traded cryptocurrency, fell to $ 17,628 over the weekend – the lowest since November 2021 – sending markets into turmoil. In addition to Bitcoin, all cryptocurrencies, including Ether, Matic, Cardano and Dozecoin, have lost 50 to 90 percent of their value since the end of last year. So much so that the market value of all traded cryptocurrencies dropped from a high of $ 3.2 trillion last November to below $ 1 trillion.

But despite the massive sale of digital assets, crypto and Web3 startups in India are still attracting funding.

Consider this: Crypto and Web3 startups have already – in the six months to 2022 – raised more than 1 billion in 43 contracts. By 2021, the space has attracted চুক্ত 536 million in 39 deals, according to data provider Venture Intelligence. Top deals include Polygon’s $ 450 million fundraiser by Softbank, Tiger Global and Sequoia India in February, cryptocurrency exchange CoinDCX’s সংগ্রহ 136 million fundraiser in April and Treasury management platform Coinhift’s May in May. That, which promised to match the value of the US dollar, has collapsed, wiping out more than $ 40 billion in investors.

A handful of early-stage startups have also attracted funding late. Zeeve, a Web3 equivalent that has raised $ 2.65 million in seed funds from Leo Capital and Blue Ventures for Amazon’s current AWS companies, led the US-based General Catalyst Stan to a 2.5 million round, saying it was the first Web3.0 bet in India. , And Nume Crypto, a Web3 payment startup, raised quo 2 million from Sequoia India in June.

In addition, some startups, such as the Hyderabad-based Vauld, a cryptocurrency exchange backed by Coinbase Ventures, have laid off employees, employing 30 percent or about 30 to 35 percent of their headcount, with the majority employing others. WaxirX and CoinDCX, India’s two largest crypto exchanges, have said they will continue to recruit people despite a 30 per cent tax on cryptocurrency trading and other regulatory challenges due to instability in the wider market. “We are hiring and tracking plans to turn it into a 1,000-employee company by the end of the year [from 500 at present]. While creating it, ”says Sumit Gupta, co-founder and CEO of CoinDCX

Read more: Crypto won’t get hit as hard as other startup sectors: Sumit Gupta

So is VC believing he is driving in space despite the noise in the market?

First, there is a lot of capital available in the system for early-stage startups. The liquidity crisis is mainly affecting startups, where most Web3 companies are still in their infancy, explained Sanjay Mehta, founder and partner of 100X.VC and a long-time crypto investor. “It is unrealistic how much capital has been raised by funding for the installation of Web3 globally and in India,” he says. Silicon Valley’s Andresen Horowitz announced a new $ 4.5 billion fund in May to support crypto and blockchain companies, in addition to a separate $ 600 million gaming fund. Bessemer Venture Partners, a US-based VC firm that has invested in Indian startups such as Firmieg, Suigi and BigBasket, has launched a $ 250 million fund dedicated to Crypto and Web3. Union Square Ventures, a New York-based venture, announced $ 625 million in funding for both “Web2 and Web3” in April. In early June, Binance— raised $ 500 million to invest in Web3 technology – the world’s largest crypto exchange trading volume. Dragonfly Capital, a San Francisco-based, crypto-centric investment firm, closed its third fund in April with 650 million in capital.

Closer to home, Sequoia India recently announced the launch of a $ 2 billion initial, venture and growth fund for India. Although the funds are not specifically earmarked for crypto and Web3 startups, the VC firm has expressed its interest in the “advanced” Web3 ecosystem. Since the second half of 2021, it has made about 20 investments in Web3 space in India. In May, CoinDCX’s venture arm announced that it would invest Rs100 crore ($ 12.9 million) in early-stage crypto and Web3 companies over the next 12 months; 30 to 40 per cent of the funds will be allocated to Indian startups.

Gupta of CoinDCX said, “This is the best time to find building companies in the long run. Even Coinbase – which has cut its staff by 18 per cent globally with about 25 to 30 people in India – has a Venture Capital (VC) arm that has so far invested $ 150 million in Indian crypto and Web3 startups.

Read more: The survey suggests that 71% of high-income individuals have invested in digital assets

Thus, “there is enough and more dry powder for early-stage crypto companies to create unique products,” says Mehta.

Second, Web 3 is where the exciting potential currently lies. “The crash is not just in the crypto market, it’s in the overall market. So what other opportunities are there for investors? “Asked Ravi Chamaria, co-founder and CEO of Jeev, a recently funded startup that helps enterprises and startups set up blockchain nodes and host decentralized apps in its cloud infrastructure.” I see no big opportunity. No, “he continued.” B2B Tech SaaS, yes — it’s doing well; fintech, previously attracted a lot of funding over the last seven to eight years, but it has become quite saturated — new fintech is now getting less funding. So Web3 is a safer bet. And this crash will last another six to 12 months. ”

However, within the Web3 space, VCs are being “selected and selective” about where they are using their money. Startups in the infra space, which include launching blockchain protocols like Polygon or automation service startups like Cloud and Tongue, analytics player, etc., are getting higher interest from VCs, Chamaria said. However, the NFT marketplace and metavers-based startups are seeing a downturn in investment. “Infra players don’t see too much excitement in bullish times and they don’t see too much discouragement in bearish times,” he said.

Third, the underlying fundamentals of India are strong. The country has more than 20,000 active crypto and Web3 developers, according to some estimates. “This is out of a total of 4.2 million Indian developers who are capable of accepting crypto,” Mehta said. “This means that India’s Web3 companies have the talent to create the next generation That’s the decent thing to do, and it should end there. ”

Gupta added, “I believe India is going to be the next Silicon Valley for Web3.” The reason, he explained, is because the industry is built entirely on technology and India is the foundation of technology due to its huge number of developers. “Ultimately what you need as energy is high quality developers who can build on top of these blockchains for adoption. Furthermore, the rate at which Web2 developers are migrating to Web3 and building solutions gives me confidence that India will continue to use crypto and Web3 It is going to become a hub. ” Mehta agrees: “India has both the talent and the money to be number one in the Web 3 space.”

Finally, in the market cycle, the recession is part of the journey. In 2017, after touching the then record high of $ 19,000, the price of Bitcoin dropped to 4,000 in December 2018 and then peaked at $ 64,000 in early 2021. “This isn’t the first crypto winter and it won’t be. Last, ”Gupta said. The recession, he said, was just a push down the road.

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