All About Crypto ETF Funds Who Will Invest 1 Dollar On Blockchain Technology?

 The etf funds was launched in August 2018 to raise $500 million. It is among the first few funds to accept investments in cryptocurrency and blockchain technology.

After the announcement of the Securities and Exchange Board of India (Sebi) to enable the listing of units of initial coin offerings (ICOs) on stock exchanges, young entrepreneurs have started raising funds via Initial Coin Offering (ICO) for new projects. Among the lot are three young venture capital and blockchain firms. While Edelweiss Group-backed Coinbase Crypto X, Edelweiss-backed Ethervest and Blume Ventures-backed Primechain Technologies have raised huge investments, Rs 25 crore ($3.6 million) for one of them, Primechain Technologies, is a significant amount.

As per the 2015 regulatory framework for ICOs, one of the key requirements is the need for the start-ups to register themselves as an SIPC (Security Interest Registration and Regulatory Authority). ICO firms do not fulfill the minimum KYC (know your customer) or other requirements to qualify as an SIPC.

The funds raised via ICOs are used to promote the token sale and ICOs as an alternate method of fundraising, said Pramod Sharma, co-founder, Quintapharma and co-founder, NxtIcX, an etf fund.

The ei fund was launched in August 2018 to raise $500 million. It is among the first few funds to accept investments in cryptocurrency and blockchain technology.

EI is not the first and nor the only fund to raise funds via ICOs. However, most of these were made by large corporates and corporations. Ei was launched to support young and innovative ventures that have developed disruptive technologies or business models in the blockchain space. Sharma said the prime reason to launch the fund was to provide early-stage venture capital to small- and mid-cap companies within the blockchain space.

“The coin fund will invest in the companies that have a unique use case or use case-driven use cases in blockchain,” Sharma said.

The fund seeks to fund companies that are working on blockchain applications in the areas of supply chain finance, finance, identity verification, healthcare, enterprise storage systems, security and identity, property rights, video surveillance, rights management and transactional rights. It does not invest in non-blockchain applications or for companies that don’t use blockchains.

The fund is not only focused on the current projects that are doing the ICO but also the near-term ones like its entry into cryptocurrency.

Selected startups will get Rs 25 crore initially and with the next tranche the size of the fund would be raised to Rs 200 crore. “Our investment strategy is such that we do not make follow-on investments,” said Sharma.

He said they are open to working with any blockchain-based application where they have developed a deep understanding and an early bet on the company.

The team of Edelweiss Ventures-backed Primechain Technologies, which has been incorporated since January 2016, is led by Prakash Raghuwanshi, who is the firm’s chief business and technology officer. “Primechain is the first company to have used blockchains to create a globally operating commerce network with 500 employees, 10,000 merchant points, and $1 billion in transactions annually,” said Sharma.

Primechain Technologies will allow the user to purchase digital assets, such as digital fiat currency, cryptocurrencies, and decentralized apps (Dapps) using BTC, ETH or other crypto-assets. The platform will enable direct exchange between these assets and fiat currency.

“Currently, the average trader size is around $100 million, while the digital asset market cap is close to $400 billion. For each trader that trades on Primechain’s platform, Primechain will charge a fee of between 1 and 3 per cent, along with a transaction fee of between 0.5 and 1 per cent. We also have an option to share the transaction fee with the merchants and developers. These commissions are on top of the traditional 3.5-to-1 split in transaction fees charged by exchanges,” said Raghuwanshi.

“Our mission is to help small and medium-sized merchants (SMBs) to make money and make payments quickly and efficiently through an innovative technology-based platform,” Raghuwanshi said.

Primechain’s solution will enable retailers to provide discounts to buyers as they purchase digital goods using cryptocurrencies. It has its own mobile app which will be a universal payment gateway for retailers in other countries. Primechain has 20 people, of which 13 are engineers.

The Primechain team is working on building a blockchain network on which the company plans to offer these services. “This will allow SMBs to sell their products without having to sign up with a merchant-acquiring platform or take on other accounts like Paytm or Amazon,” Raghuwanshi said.

Raghuwanshi and Sharma said Primechain is planning to raise funds in the next six months to fund the next tranche of the fund and other related expenses. Sharma said he is excited to see what these companies do over the next few months.

Based on the total raised, the report has observed that the funds are predominantly being raised for the platform or for an app developer or for an ICO which allows a company to raise capital in the form of digital or cryptocurrency tokens.

WHAT IS AN ICO

ICOs are virtual-currency or cryptocurrency sales that enable early-stage startups and investors to raise money using cryptocurrency, such as Bitcoin or Ethereum. ICOs differ from IPOs as an ICO is conducted under a cryptographic model and it is more suitable for the tech-savvy individuals, according to a 2017 report by PwC. The report said that the cryptocurrencies were projected to grow, generating at least $3.2 billion of investment, at the end of 2017.

The report further observed that, at the end of 2017, Bitcoin and Ether (the two largest cryptocurrencies) saw an increase in both daily transaction volume and the average purchase price compared to 2016.

The report said that according to a recent study by Pantera Capital, in 2017 there were four times more ICOs than venture-capital-funded companies.

Founded in April 2016, Edelweiss has developed a strong investment bank platform with a pan-India coverage, and extended its reach to new business areas like healthcare and education. The core theme is to build disruptive capabilities.

According to Raghuwanshi, Primechain has grown in leaps and bounds. “Since inception, we have almost doubled our headcount to 60 people. We are in the process of recruiting around 20 more engineers and product designers. We have been validated by all our clients,” he added.

 

Consortium Fintech Investments is an Indian investment and partnership platform set up by Edelweiss Alternative Asset Advisors to invest in fintech-enabled start-ups and late-stage, venture-backed enterprises that are building technology-enabled businesses to disrupt traditional financial services. The investment platform was incorporated in June 2017 and started operations in December 2017.