Also in this letter:
■ Crypto bill calls for arrest without warrant and no bail: report
■ Spinny rides into unicorn club with $283 million funding
■ Man who claims he invented Bitcoin prevails in $54 billion trial
Despite crypto uncertainty, Indian VCs put their money on Web3
Indian venture capital firms are betting big on Web3 startups, in the belief that these companies are building products for the next stage of the internet.
What is Web3? Web3 refers to a decentralised online ecosystem based on blockchain technology. Apps and platforms built on Web3 won’t be owned by a single gatekeeper. They will instead be owned by the users themselves. In its current form, Web3 encompasses categories such as cryptocurrencies, non-fungible tokens (NFT), decentralised finance (DeFi), and decentralised autonomous organisations (DAO).
Getting in on the ground floor: Early-stage VC Antler India has committed to investing in 25-30 startups in the blockchain and Web3 space in the next two to three years.
It has plans to deploy $100 million to $150 million in more than 100 Indian startups over the next three years, including $50 million in Web3 companies.
Sequoia India has made about 20 investments in Web3 startups, including Betafinance, Clearpool, Coinshift and Faze. Before 2021, it had invested in only two Web3 startups.
Risky business: The investments continue despite regulatory uncertainty in India, with the cryptocurrency bill expected to be tabled in the ongoing session of Parliament.
Investments in the space have been dominated by international funds such as Jump Capital, Pantera Capital, Coinbase Ventures, which have been scooping up early winners. International funds have invested over $500 million this year in India’s startup and blockchain ecosystem.
“There is still regulatory risk,” said Sharma. “We are making a commitment officially not because we think the regulations are necessarily going to be 100% positive but because we think there is a long-term story here.”
India’s crypto bill calls for arrest without warrant and no bail: report
India’s cryptocurrency bill, which will reportedly ban the use of digital currencies for payments, also says violators of the law will be subject to arrest without warrant and can be held without bail, Reuters reported, citing a source with direct knowledge of the matter and a summary of the bill it has seen.
Details: According to the summary of the bill, the government is planning a “general prohibition on all activities by any individual on mining, generating, holding, selling, (or) dealing” in digital currencies as a “medium of exchange, store of value and a unit of account”.
- Flouting any of these rules would also be “cognisable” – meaning violators could be arrested without a warrant, and “non-bailable,” the summary said.
- The Securities and Exchange Board of India (Sebi) will be the regulator for crypto assets, the draft summary said.
- The government also plans to crack down on advertisements that seek to woo new investors, according to the draft summary of the bill and the source.
- Self-custodial wallets that allow people to store digital currencies outside exchanges are also likely to be banned, the source added.
The tough new regulations stem from the central bank’s grave concerns about digital currencies and aim to put in safeguards to ring-fence the traditional financial sector from cryptocurrencies, the draft summary of the bill said.
Death blow: Though the government has previously said it aims to promote blockchain technology, the proposed law will also deal a blow to blockchain developments and decimate India’s nascent non-fungible token (NFT) market, lawyers said. “If no payments are allowed at all and an exception is not made for transaction fee then it will also effectively stop blockchain development and NFT,” said Anirudh Rastogi, founder of law firm Ikigai Law.
$6 billion in crypto: The number of investors in crypto assets has surged in India since the start of the pandemic, lured by the bull market and a barrage of advertisements, especially during the Indian Premier League.
While there is no official data, industry estimates suggest there are 15-20 million crypto investors in the country, with total crypto holdings of roughly Rs 45,000 crore ($6 billion).
Halt on ads: We reported last month that large crypto firms in India had decided to stop putting out new ads until rules around cryptocurrencies were in place. About half a dozen cryptocurrency exchanges and one intermediary in India told us they would not launch new ads in print, television and radio in the wake of concerns voiced by the government.
Spinny rides into unicorn club with $283 million funding
Spinny founder Niraj Singh
Spinny, an online used car marketplace, has raised $283 million in its Series E funding round led by ADQ, Tiger Global and Avenir Growth.
The round gives the company a valuation of around $1.8 billion and marks Spinny’s entry into the unicorn club – startups valued at $1 billion or more. It is the 38th unicorn minted in India this year. Spinny was valued at $740 million when it raised $108 million from Tiger Global and others in July.
Deal details: ADQ and Tiger Global invested $100 million each, while Avenir Growth put in $50 million and Feroz Dewan’s Arena Holdings infused $25 million, a source told us.
The fundraise also includes a $35 million secondary sale component in which some existing investors have partly or fully cashed out.
How’s business? Founded in 2015 by Niraj Singh, Mohit Gupta, and Ramanshu Mahaur, Spinny currently sells more than 3,000 used cars every month, three times what it did in January. It competes Cars24, Cardekho and Droom, all of which have raised large rounds this year.
According to industry estimates, about 4.5 million used cars were sold in India in 2019 and the market is growing at a 12% compounded annual growth rate.
Other done deals
■ Agritech startup AgroStar has raised $70 million in a Series D funding round led by Evolvence, global asset manager Schroders Capital, Hero Enterprise, and UK’s development finance institution CDC. The round also saw participation from existing investors Aavishkaar Capital, Accel, Bertelsmann, Chiratae Ventures, and Rabo Frontier Ventures.
■ Customer engagement platform MoEngage has raised $30 million, led by Steadview Capital. Existing investors Multiples Alternate Asset Management, Eight Roads Ventures, F-Prime Capital, and Matrix Partners also participated in the round. The company has raised $100 million so far.
■ LenDenClub on Tuesday said it has raised $10 million (about Rs 75.3 crore) in a funding round from a clutch of investors, including Tuscan Ventures, Ohm Stock Brokers, Artha Venture Fund and others, valuing the peer-to-peer (P2P) lending platform at more than $51 million.
■ CloudSEK, a cybersecurity startup headquartered in Singapore and that has most of its operations and engineering based in India, has raised $7 million in Series A funding, its largest round yet. This round, led by MassMutual Ventures, increases the total amount raised by CloudSEK to around $10 million.
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Man who claims he invented Bitcoin prevails in $54 billion trial
Craig Wright, a computer scientist who has claimed to be Satoshi Nakamoto, the inventor of Bitcoin, largely won out in a Florida jury trial over whether the estate of a former business partner deserved half of a Bitcoin cache that’s now worth about $54 billion.
The jury cleared Wright on nearly all issues in the dispute, including that half of the 1.1 million Bitcoin in dispute belonged to the family of Dave Kleiman, the former partner and computer forensics expert. Kleiman died in April 2013.
While concluding that Wright was not liable for fraud, jurors did award $100 million in intellectual property rights to W&K Information Defense Research LLC, a joint venture between the men. The trial began on November 1.
“This has been a remarkably good outcome and I feel completely vindicated,” Wright said in a video message. “There are still more fights. We are going to make everything change: cryptocurrency to digital cash the way it’s meant to be.”
According to court papers, the 1.1 million Bitcoin had been mined by Nakamoto, who wrote a white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” in October 2008. Wright claimed in 2016 that he was Nakamoto. The claim has been disputed.
Samsung to merge mobile and consumer electronics units, names new CEOs
Samsung Electronics announced today that it will merge its mobile and consumer electronics divisions. It also named new co-chief executives in its biggest reshuffle since 2017. The revamp is meant to simplify the company’s structure and help it focus on the logic chip business.
Two co-chief executives, instead of three, will lead the South Korean firm as it pivots on the two business pillars of chips and consumer devices, including smartphones.
Samsung, whose Galaxy phones helped it become the world’s biggest smartphone maker by volume, is seeking to revive slowing mobile growth, whose profit contribution shrank to 21% last quarter from nearly 70% at its peak in early 2010s.
Instead, its component business, led by chips, has become the most profitable, helped by a boom in data storage and a recent shortage of global semiconductor supplies.
The business generated nearly three-quarters of Samsung’s 15.8 trillion won ($13.4 billion) operating profit last quarter.
Today’s ETtech Top 5 newsletter was curated by Zaheer Merchant in Mumbai. Graphics and illustrations by Rahul Awasthi.