Coin DCX announces Rs100-crore fund to invest in Web3 start-ups
- May 12, 2022
- Posted by: OptimizeIAS Team
- Category: DPN Topics
Coin DCX announces Rs100-crore fund to invest in Web3 start-ups
Subject: Economy
Section: Capital Market
Indian crypto exchange Coin DCX has launched its investment arm, Coin DCX Ventures, to invest Rs 100 crore in early-stage crypto and block chain start-ups over the next 12 months. While the Coin DCX Ventures mandate is to invest in Web 3 companies globally, the company expects 30-40per cent of its portfolio tocome from India. The fundwill focus on Seed and SeriesA investments, but the mandate is flexible.
Seed Money
- Seed money, sometimes known as seed funding or seed capital, is a form of securities offering in which an investor invests capital in a startup company in exchange for an equity stake or convertible note stake in the company.
- The term seed suggests that this is a very early investment, meant to support the business until it can generate cash of its own (see cash flow), or until it is ready for further investments.
- Seed money options include friends and family funding, seed venture capital funds, angel funding, and crowdfunding.
- Seed money can be used to pay for preliminary operations such as market research and product development.
- Seed funding is generally one of the first steps investors offer to get startups on their feet before they become fully operational.
- Seed funding involves a higher risk than normal venture capital funding since the investor does not see any existing projects to evaluate for funding.
Difference in seed capital and venture capital–
Seed capital can be distinguished from venture capital.
- Venture capital investments tend to come from institutional investors,
- involve significantly more money,
- are arm’s length transactions,
- involve much greater complexity in the contracts and corporate structure accompanying the investment.
Series A, B and C funding rounds are merely stepping stones in the process of turning an ingenious idea into a revolutionary global company, ripe for an IPO.
Series A Funding
- Once a business has developed a track record (an established user base, consistent revenue figures, or some other key performance indicator), that company may opt for Series A funding in order to further optimize its user base and product offerings.
- In this round, it’s important to have a plan for developing a business model that will generate long-term profit.
- Series A rounds raise approximately $2 million to $15 million
- Investors are looking for companies with great ideas as well as a strong strategy for turning that idea into a successful, money-making business. The investors involved in the Series A round come from more traditional venture capital firms.
- It’s also common for investors to take part in a somewhat more political process. It’s common for a few venture capital firms to lead the pack. In fact, a single investor may serve as an “anchor.” Once a company has secured a first investor, it may find that it’s easier to attract additional investors as well.
- Angel investors also invest at this stage, but they tend to have much less influence in this funding round than they did in the seed funding stage.
Series B Funding
- Series B rounds are all about taking businesses to the next level, past the development stage.
- Investors help start-ups get there by expanding market reach. Companies that have gone through seed and Series A funding rounds have already developed substantial user bases and have proven to investors that they are prepared for success on a larger scale.
- It is used in bulking up on business development, sales, advertising, tech, support, and employees costs a firm a few pennies.
- The average estimated capital raised in a Series B round is $33 million
- Series B appears similar to Series A in terms of the processes and key players.
- The difference with Series B is the addition of a new wave of other venture capital firms that specialize in later-stage investing.
Series C Funding
- Businesses that make it to Series C funding sessions are already quite successful.
- These companies look for additional funding in order to help them develop new products, expand into new markets, or even to acquire other companies.
- In Series C rounds, investors inject capital into the meat of successful businesses, in an effort to receive more than double that amount back. Series C funding is focused on scaling the company, growing as quickly and as successfully as possible.
- Series C funding could be used to buy another company.
- In Series C, groups such as hedge funds, investment banks, private equity firms, and large secondary market groups accompany the type of investors mentioned above.
- Companies that do continue with Series D funding tend to either do so because they are in search of a final push before an IPO or, alternatively, because they have not yet been able to achieve the goals they set out to accomplish during Series C funding