Cypher Capital Managing Partner and CEO Vineet Budki said the fund will predominantly invest in blockchain start-ups through tokens instead of equity rounds. The UAE-based fund had earlier committed 40 per cent of its $100-million fund to Indian blockchain startups.
Budki spoke with BusinessLine about his preference for tokens and the fund’s outlook for India. Edited excerpts:
Why do you prefer to invest through tokens? of this strategy
We want to capture the early mover advantage because, right now, everyone in India is focused on equity. We want to invest through tokens and build up the ecosystem for blockchain startups in India. The investor does not get ownership of the company but gets access to a token that will have some utility in that blockchain project.
I have invested only through tokens, except for one equity investment. My experience with equity has not been good. Personally, I also think there’s a lot of non-transparency there, so I do what I’m good at.
Does the regulatory ambiguity in the Indian market worry you as an investor?
I think the tax on crypto has been amazing for us because it shows that the government recognises it as a legal revenue generator. We also saw the markets quite bullish after it was announced. For me, taxation doesn’t have much of an implication because I am an investor in startups. I am not a retail investor going on an exchange and buying Solana or another cryptocurrency. I am investing in blockchain startups that may or may not become great projects in the future. And taxation only helps me understand that the government has technically accepted it as a business.
Which blockchain use-cases interest you?
Decentralised finance or DeFi is something that I am quite bullish about. About $85 billion has already been invested in the DeFi market and I expect trillions of dollars to be invested in this space by 2030. The second use-case is GameFi (play-to-earn blockchain games). Imagine you are part of a game where you basically help the game grow. The startup, which is building this game, raises money through tokens and shares the spoils of these tokens with the players. Then, in the case of NFT (non-fungible tokens), I understand some of the logic in it and I don’t understand others. I see a real use-case for security backed NFT, like owning a part of a house through fractional ownership.
You have committed 40 per cent of your $100-million fund to India. What is your analysis of the India market?
India is very interesting for us. Twenty years back, India was the outsourcing capital of the world. Then, 10 years back, India became the tech hub of the world. Now India is seeing a number of unicorn startups being built. So, India has talent, innovation, and Web3 is the future. I see India as a place where a lot of innovation will come, whether in terms of companies building up from India or smart coders building global organisations.
For me, it is about developing that ecosystem in India. I just signed up with Ocean Protocol to build their small ecosystem fund. It’s a very small $5-million fund. I’m also talking to Polkadot to build an ecosystem fund of $20 million, through which we will be doing a lot of hackathons, ground development, and visibility for them across South Asia, Africa, and the Middle East [West Asia]. It’s not just about investing in crypto, we want to develop an ecosystem where we get people to build new projects, and build geography-specific products, among other things.