Total risk funding in Indian crypto and blockchain startups shot up to $587.16 million as of October 17 this year.
Crypto exchange platforms CoinDCX and Coinswitch Kuber have alone raked in almost 60% of the capital raised this year.
Indian investors are also starting to formulate plans for dedicated crypto funds and experiment with some investments.
New Delhi: The year 2021 has so far been the best year for domestic crypto, blockchain startups as investors are lining up to cash in on India’s large customer base, pouring in millions of dollars into these startups.
According to a report in the Economic Times, the total risk funding in Indian crypto and blockchain startups shot up to $587.16 million as of October 17 this year, compared to $37 million in the previous year, the highest ever, as per data shared by industry tracker Tracxn.
The bulk of the capital has come from international investors as they backed companies with significant traction, industry players said.
“We are in a macro bull market rally. There’s a lot of capital on the side lines for high traction firms. There’s also a lot of liquidity; for example, the Coinbase listing in April generated new wealth, which is looking for new places to be deployed,” the publication quoted Joel John, an investor at digital asset venture capital firm Ledgerprime as saying.
Crypto exchange platforms CoinDCX and Coinswitch Kuber — the two new crypto unicorns in India — have alone raked in almost 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 told the financial daily 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.
Elevation Capital, which has backed startups like Paytm and Swiggy, is deploying actively this year into crypto and blockchain. It has completed multiple deals across crypto investing, nonfungible tokens (NFTs) and gaming, and decentralised finance, a spokesperson said. It also has a dedicated team and expert group working on crypto and is looking to continue being active in this space.
This year, Sequoia India doubled down on its investment in CoinSwitch Kuber and participated in a round and invested in a crypto treasury management platform Coinshift. John of Ledgerprime said bullish international investors are “not being reckless” and are making calculated bets by exposing a relatively small portion of their overall portfolio.
For instance, Silicon Valley venture fund Andreessen Horowitz recently made its entry into India by pumping in $80 million in crypto platform Coin-Switch Kuber at a valuation of $1.9 billion. The firm runs a Crypto Fund III which is about $2.2 billion in size.
Retail and institutional buyers have also joined the crypto industry in droves. India has emerged as one of the fastest-growing cryptocurrency markets globally, the financial daily mentioned citing a recent report by Chainanalysis, a New York-based blockchain data platform.
“Large institutional-sized transfers above $10 million worth of cryptocurrency represent 42% of transactions sent from India-based addresses vs 28% for Pakistan and 29% for Vietnam,” it said. “Those numbers suggest that India’s cryptocurrency investors are part of larger, more sophisticated organisations.”
The uptick has happened in the backdrop of regulatory flux in India and talks of a potential ban earlier this year. However, there have been several positive signals from the government that have shifted the conversation away from a ban. “Relative to nine months ago, we now have multiple Indian crypto unicorns and massive traction for Web 3.0 in the Indian tech sphere,” the ET report quoted Balaji Srinivasan, former chief technology officer of global crypto major Coinbase as saying.
“I see Web 3.0 becoming as central to Indian tech as Web 2.0 was to American tech. Web 3.0 is how technology leaves Silicon Valley and puts India — and everyone else — on a completely level playing field. It is India’s opportunity to leapfrog all legacy tech players with Web 3 versions of social media, messaging, finance.”
Web 3.0 refers to the next generation of internet services for websites and apps. Tanvi Ratna, CEO of think tank Policy 4.0, said 2021 has marked a huge shift in terms of industry maturity. “The biggest reason why we have seen a growth in the crypto industry is because there was not a ban in March which was so close to happening,” she said. The government has also been positive of late and that the fund is on the lookout for exceptional entrepreneurs building projects which solve deep problems, the publication quoted Pratik Poddar, principal at Nexus Venture Partners as saying.