Five years after mocking India's colonial past, Marc Andreesen, one of Silicon Valley’s foremost venture capitalists and a member of Facebook’s board, now wants to make money off India’s fancy for cryptos.
Andreesen’s venture, a16z [founded in 2009 by Marc Andreessen and Ben Horowitz], along with Coinbase Ventures, has invested $260 million in Series C round of CoinSwitch Kuber, the four-year-old Indian start-up which is an aggregator of crypto exchanges. Existing investors Paradigm, Ribbit Capital, Sequoia Capital and Tiger Global have also participated in the round. Following the massive fund infusion, CoinSwitch has become the country’s second crypto Unicorn, valued at $1.9 billion, after CoinDCX hit $1.1 billion after a $90 million Series C round in August.
While Andreesen, who runs his twitter handle as @pmarca, did not tweet about the deal, David George, a general partner at Andreessen Horowitz, tweeted through his handle (@DavidGeorge83): “We’re excited to partner with @Coinswitch @CoinswitchKuber and @ashish343, along with our friends at @coinbase. The opportunity for India is massive, and we expect participation in crypto there to be among the highest in the world.”
In 2016, Andreesen had got upset over India’s decision to strike down Facebook’s free internet access service that was being offered with a rider -- the access was only for Facebook and a couple of other services. However, the telecom regulator struck down the proposal along with others on the grounds that it was discriminatory and infringed on principles of net neutrality.
Andreesen, who has been on the Facebook board since June 2008, took to Twitter to criticise the ruling by commenting that it is "morally wrong" to deny the "world's poorest free partial Internet connectivity." He called India's decision as "another in a long line of economically suicidal decisions made by the Indian government against its own citizens." But the one tweet that was in poor taste was when he made a reference to India’s colonial past: "Anti-colonialism has been economically catastrophic for the Indian people for decades. Why stop now?" (See: Pictured tweet)
The comment drew criticism and Facebook went into damage control stating that it did not endorse Andreessen’s views. The venture capitalist followed suit by tweeting: "To be clear, I am 100% opposed to colonialism, and 100% in favor of independence and freedom, in every country, including India."
While a view soon emerged that since Andreessen had never visited India and would have underestimated the sensitivity of the topic, he continues to be on the board of the social networking website which counts India as its second-largest market with estimated group revenues topping $1 billion.
a16z, which has more than $3 billion under management across three crypto funds, is backing bold entrepreneurs who are building crypto companies and protocols. “Our funds are designed to include the best features of traditional venture capital, updated to the modern crypto world,” states the fund’s website. The fund has 36 crypto investments, making CoinSwitch its 37th investment.
While crypto has not been officially recognised as an asset class by the government, cryptocurrency investments grew from $923 million in April 2020 to $6.6 billion in May 2021, according to a report by Chainalysis, a blockchain data platform.
Unlike other crypto platforms, CoinSwitch merely aggregates prices from other exchanges and based on the investment ticket size, offers a single but differential rate. So, prices for an investor investing Rs 100, Rs 1,000 or Rs 1 crore will vary. The fact that crypto is an unorganised market with no regulations has given start-ups an opportunity to make the most of young Indians' obsession with the digital asset. The average age of a crypto investor is about 24 compared with 28 for a MF investor and 32 for a stock investor, Ashish Singhal, co-founder and CEO, CoinSwitch Kuber, had told FortuneIndia. The average ticket size of a crypto investment on CoinSwitch is Rs 9,000 per month per user but varies drastically between cities. In Tier-I cities, it is about Rs 11,600, in Tier-II about Rs 6,600 and in Tier-III about ₹3,500 per month per user.
While the government is yet to make up its mind on cryptos, Singhal and his ilk are looking to convince lawmakers. Singhal told Fortune India that by bringing on board high-profile investors, he hopes CoinSwitch would be able to make a case for its legitimacy.
Even as Singhal and his team have their task cut out, Andreesen might well use this occasion to extend festive greetings to Indians.