VC Appetite For Crypto Investments Remains Strong: Ken Li, Binance

The crypto crash this year has sent shivers across the globe in VDA space and it has effected VC investments in crypto companies too. According to Crunchbase, investments in crypto companies have touched USD 9.3 billion in the first six months of 2022, which is down from USD 12.5 billion in the first half of last year. But the deal flow in the crypto realm has increased YoY, which indicates smaller-sized investments. 

BW Businessworld's Rohit Chintapali interviewed Ken Li (Executive Director, Investments and M&A, Binance) to understand the nuances of VC crypto investments in the current grim climate. During the interview, Li elucidated on the potential of crypto entrepreneurs in India and why the country is of special interest to Binance Labs (the venture arm of Binance). Excerpts:  

What is the true potential of India in Web3 and crypto? 

We look at a number of positive trends that point to strong potential for Web3 in India. Specifically, we are encouraged by the relative youth and size of India’s engineering talent, as well as its high adoption of digital payments, gaming and metaverse/avatar use cases.

How is Web3/crypto expected to grow globally? Are there any specific nations that hold a lot of promise in this space?

Web3 and crypto will continue to grow globally in terms of market size. Non-fungible tokens (NFTs) and other digital assets will drive more use cases and wider adoption as the market propels forward. With more regulatory clarity, Web3 could change social networking and the way we function as a society.

Asia-Pacific has the potential to register the fastest growth in the Web3 sector. This trend can be attributed to wider adoption of blockchain technologies in the region, artificial intelligence and machine learning acceleration, investment size, higher demand for data security and ownership, etc.

Crypto is under a lot of scrutiny, given the current crash. Do you think crypto will remain an important part of Web3?

The crypto sector is still in its early stages. Many legal frameworks around crypto are not yet cemented. Cryptocurrencies, however, will remain a key part of the broader Web3 ecosystem. While blockchain is core to Web3’s decentralized design, crypto assets could power the space as a medium of exchange.

Do you think investors internationally remain interested in Web3 and crypto startups/platforms despite the slowdown?

Venture capitalists’ appetite for crypto investment remains strong, despite the market conditions and challenging macroeconomic environment. While the total investment in crypto startups has decreased in the first half of 2022, deal flows have consistently increased year-over-year. We believe bear market periods allow us to work with the most dedicated Web3 founders who focus on building innovative products. There is much less noise and speculation.  

What kind of regulations can crypto expect in the coming two years for formalisation/legalisation in economies globally?

Given the rapid changes in the industry, the exact shape of regulations we will see in the next two years is still unclear. However, more discussions will revolve around consumer protection, stablecoin regulation, and tax treatment of digital assets.  

What is Binance Labs’ vision for India?

The growing number of tech-savvy and aspiring crypto entrepreneurs in India hold the potential to spawn sound Web3 projects over the coming year. We want to support these committed Indian founders to build innovative Web3 products and drive more use cases. Our team is constantly studying the crypto environment in India to identify the best entry points and attract more local engineering talent.

Tell us about your latest incubation program in India.

We are currently fielding applications for our Incubation Season 5, and India is a geography that is top-of-mind. Our past incubation successes have included Polygon, one of the most notable projects in the India crypto community.

Also Read: Crypto Revival On Cards In 2022?