Last year, blockchain Startups across the globe have raised around $1.3 billion through venture capital (VC) funds alone, not counting other funding sources such as individual investors and institutions, or through initial coin offerings (ICOs). And when it comes to India, blockchain startups in the country have raised mere $5.3 million between January 2016 and April this year, including & counting all funding options, sources, investment instruments etc.
This negative funding traits of Indian startups working in blockchain technology is prevailing despite of much ambitious “Digital India” initiative in place, launched by the government three years back.
However, this reluctant outlook of investor is not just in India but globally too. VC investment in blockchain and Bitcoin companies across the globe hit a new low in number of financed companies. While the total sum of investment was relatively high, half of it came from financial institutions and tech giants rather than VCs.
To find a way around the traditional funding route, many blockchain startups, in India and globally, have opted to raise funds through initial coin offerings (ICOs), an unregulated means of raising money from potential investors using cryptocurrencies such as Ethereum and Bitcoin.
But in India, startups are offering ICOs in other countries with more cryptocurrency-friendly policies like Switzerland, Bulgaria, Estonia, Singapore or Japan, because of the fact that the government and India’s central bank RBI have apprehension towards crypto currencies and RBI had recently put a ban on cryptocurrencies related banking transactions in the country.
For an instance, Auxesis Group, which is a blockchain and distributed ledger solutions startup, has been a purely bootstrapped firm without any seed funding from VCs but it recently launched an ICO for its flagship product ‘AuxLedger’ and plans to reach its target of $20 million by the end of September.
The most recent blockchain startup in India to raise funds in a traditional way is Elemential Labs, which is a platform that allows developers to build and manage blockchain applications at scale. Touted as “WordPress-for-Blockchain”, the startup raised about $1 million from Matrix India Asset Advisors, Eight Innovate Ventures and Investopad, among others, in April this year.
In March, Mumbai-based blockchain-based startup Nuo Bank had raised $250,000 in a seed funding from payment gateway firm PayU India’s chief executive officer Amrish Rau and managing director Jitendra Gupta.
In the same month, an another Mumbai-based blockchain startup Aetlo Tech, which was just a-year-old startup, got acquired by Page Solutions, a global banking and financial firm based out of UK.
Below is the complete list of the largest deals globally in the blockchain industry during the year-2017 ending September 30, according to Goldman Sachs. Investment amounts are in the millions.
Last year in March, YES BANK — for its unique business accelerator program — YES FINTECH, had selected 12 Blockchain startups to offer mentorship and guidance from industry experts on how to create a scalable business from their products and deploy their innovative technologies within a collaborative framework. The bank’s accelerator program also provided access to funding of upto USD 1 million through VC partners without any equity commitment.