As the slow down in funding impacts start-ups globally, venture capital firms are still bullish on Web3 and crypto infrastructure companies.
In the past two months, multiple Web3 funds such as Binance Labs’ $500-million outlay, Akatsuki’s $20-million Asia focussed fund, Andreessen Horowitz’s $4.5-billion fund, and Cashaa’s $20-million fund, have been announced. This positive outlook from global VCs is also backed by the sustained deal flows in early-stage Web3 and crypto infrastructure companies.
In India, $143.3 million has been invested across 21 Web3 and crypto start-ups this year, according to data shared by Tracxn. Of this, a majority of the deals were early-stage rounds, with the only exception of crypto exchange, CoinDCX, which raised a late-stage funding round.
Even as venture capitalists have tightened their pockets for the broader start-up ecosystem, they continue to stay interested in Web 3 projects. “Generally speaking, start-ups are seeing slightly lower valuations and the market is a bit cautious, but the excitement towards certain sectors like Web3 and crypto infrastructure companies is still there. There will be a lot of investor attraction, and maybe one will find high valuations in these sectors, even in the early stage,” Amit Nawka, India Startups Leader at PwC India, told BusinessLine.
Adding to this, Yuji Kumagai, Principal at Akatsuki, Inc, which recently launched a $20-million Web3 fund focussed on Asian companies, said: “Even though there is regulatory ambiguity, we feel there is a huge potential in the Indian market. We expect many great projects to emerge out of India in the next few years. Web2 has essentially been dominated by the West, and Asian companies have largely focussed on local innovation. But, with Web3, Asia has the chance to build global projects.”
Growing India focus
In addition to VC firms, global crypto and Web3 companies are also taking interest in the Indian Web3 ecosystem, despite the regulatory ambiguity and dropping trading volumes. Global companies such as Cointracker, Coinbase and Kassio recently entered India, eyeing the vast Web3 and crypto-market opportunities in India.
Jon Lerner, Chief Executive Officer of CoinTracker, which announced its India foray last month, said: “India has tens of millions of crypto users already, and there’s arguably no place on earth where the opportunity for crypto to increase financial freedom and prosperity is larger than in India.” The opportunity size and increased clarity are the main drivers for scaling up investment and committing to the region as the firm has, he added.
Adding to this, Kumar Gaurav, Founder & CEO, Cashaa, said: “India is the biggest market in terms of the number of crypto users. It is also a very interesting market, where cash circulation is increasing every year, showing that people are looking to hold the value in a decentralised fashion. India also has the highest penetration of the Internet and, in the last two decades, the Indian education system has produced engineers on a mass scale that there is one in every house. All of this is in the favor of the Web 3 movement and is creating a mass market of cryptos in India.”