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Despite the regulatory uncertainty and the volatility of cryptocurrencies, Indian start-ups in the space saw funding grow 73 per cent in the first six months of calendar 2021 compared to the whole of 2020.
Total funding year-to-date in 2021 stood at $50.03 million against the $28.85 million raised by cryptocurrency-based start-ups in 2020, according to data from Tracxn. This is much higher than the $2.55 million raised across three rounds in 2019 and $4.78 million raised across five rounds in 2018.
Top gainer
Bengaluru-based crypto trading start-up CoinSwitch Kuber was the top gainer, accounting for $41.5 million of the $50.03 million raised so far in 2021.
The lockdown in 2020 had led to increased activity in the cryptocurrency market as retail and institutional investors turned to this investment avenue as volatility hit the stock market.
“Cryptocurrency has seen tremendous growth in the last one year and from a consumer and technology standpoint, India is an important destination for cryptos. For instance, within just one year of our launch, we have crossed 7.5 million users. This gives investors the confidence of the massive potential that the Indian market offers. Other driving factors are Bitcoin hitting record highs during the year and well-known companies investing in the currency,” Ashish Singhal, Co-founder and CEO, CoinSwitch Kuber, told BusinessLine .
The No 2 start-up in the space, in terms of funds raised, is Mumbai-based crypto exchange CoinDCX, which has raised $19.4 million in the past three years. CoinDCX is backed by 100X.VC, Coinbase Ventures, Bain Capital Ventures, and Polychain to name a few.
Silicon Valley’s Tim Draper, known for his investments in Tesla, SpaceX, Twitter, Skype, and Baidu, too, has invested in the crypto space in India through Unocoin.
People seeing value
“More and more people are now believing in the inherent value of a cryptocurrency. We have seen some really good use cases coming up in the last two years including the rise of decentralised finance (DeFi) or taking loans from the blockchain and the non-fungible tokens (NFTs), which puts a digital certificate of ownership on digital art or an asset. The investments are a lagging indicator of the work that has happened in the space,” said Vatsal Kanakiya, partner and CTO, 100X.VC.
However, the volume and amount of investment is still very low when compared to funding of other fintech start-ups.
“The funding numbers you are seeing is still very small in comparison to other companies in the fintech space. If the industry gets regulatory clarity, instead of getting banned, you’ll see this (funding) jump by 20-50x. There are a lot of early investors who think they might miss this early stage valuation and are willing to take risks,” said Naveen Surya, Chairman, Fintech Conversion Council and Emeritus Chairman, Payments Council of India.
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