Exclusive: Indian Tech Investors Join Hands To Launch Crypto Fund B1T Capital In The US

At a time when the entire country is eagerly awaiting the Subhash Chandra Committee report on cryptocurrency and ICOs regulations in India, some Indian technology investors have joined hands to launch a dedicated crypto fund named B1T Capital.

Owing to the lack of regulations in the country, the fund has been registered in the US and will invest primarily in US-based crypto startups through private presales.

Speaking to Inc42, Utsav Somani, Managing Partner, B1T Capital and Partner AngelList India, said, “Almost all the investors and the capital in this pool (B1T Capital) are Indian, except maybe a few. It is registered in the US due to favourable regulations.”

He added that it is estimated there are going to be 500 new crypto funds in 2018 globally. Interestingly, none are from India. “B1T Capital is a step towards changing that. India is the most emerging market geography that projects will need access to at some point in their maturity curve and (they can get that) by partnering with us. We aim to open up India’s crypto ecosystem for them,’’ added Somani.

B1T Capital has already invested in crypto startup Orchid(.com) and is about to close another investment.

B1T Capital Fund

Some 20 investors have raised close to a few million dollars (single digit), which will be invested in some 25 projects in the next two to three years.

The ticket size of the investments will vary from $75K to $150K, said Somani. “Since evaluating blockchain-based projects requires an entirely new level of expertise, B1T Capital is going to target projects that have experienced sectorial investors like the large crypto funds (Polychain, Metastable, A16Z Crypto etc).”

Utsav Somani believes that crypto cycles change very quickly so it’s impossible to create a long-term viewpoint in this market. One needs to reassess how to take a stand every few months, he added.

The nature of investments will be limited to presale projects, and B1T Capital doesn’t intend to delve into the world of ICOs, which have now become a popular alternate route to invest in.

Instead, the fund will only participate in presales of solid web 3.0 infrastructure layer projects. “I think the window of opportunity to invest in the base layer of such interesting new creations is very short (~few years) and we aim to target investments in projects with a good set of investors. This is not a pool to do investments into unregulated, non-KYC based projects and ICOs. We aim to adhere to strict regulations at all times,” said Somani.

Shifting Trends: Investors Likely Join In Presales Instead Of ICOs 

According to Utsav Somani, the primary reason for B1T Capital not to associate with ICOs is because what happened in 2017 was something extraordinary and almost resembled the Wild Wild West of fundraising. It led to many issues like governance, fake white papers, and untraceable development teams, including some funny exit scams.

What came out of the incident was the need for regulation and, more importantly, governance. If projects could have access to some of the best stable investors and not regular retail investors who’re looking to flip their early investments for more profits to reinvest in, one could easily see more of these presales going forward.

This was further highlighted by Crunchbase in its CBInsights report. “B1T Capital is born because of the need to pool capital to participate in such interesting opportunities that arise from the ‘venture capital’ moment in crypto.”

B1T Capital aims to take a long view of the market and back projects that will take time to mature but have the potential to really redefine how the markets and protocol layers are organised and structured.

To that extent, the first project B1T Capital invested in is Orchid.com, a startup that  is trying to redefine how censorship can be removed from the Internet to make it truly open as it was intended to be. It is backed by some of the best investors (Sequoia, A16Z, Polychain Capital, Blockchain Capital and more) and will not be doing a public sale.

Crypto Investment In India: The Current Scenario

While the Subhash Chandra Committee will be submitting its report on cryptocurrency and ICOs regulations in the first fortnight of July, there will be clarity on the matter only after the government accepts the committee’s recommendations and decides to implement them after the enactment of the bill draft.

However, given the fact that the general election is due early next year, Utsav Somani said, “It’s a wait-and-watch moment for the Indian crypto industry. I hope that changes soon to fast and favourable — most of the crypto projects are taking flight and registering overseas, resulting in loss of talent, capital, and the opportunity to be part of the next wave of Internet projects.”

VCs like Blume Ventures (Unocoin), Sequoia Capital, and Angel Investors such as Sanjay Mehta have been quite active in investing in crypto-related firms. However, according to Utsav Somani, this is the first time Indian Investors are launching a dedicated crypto fund that intends to participate in presales.