In an interview with Inc42, Ken Li, executive director, Investments, Binance talked about the platforms investment mantra and strategies, plans for investing in Indian startups, crypto winter, and more
The large base of tech-savvy and aspiring crypto entrepreneurs in India has the potential to spawn technologically-competent enterprises in the blockchain space: Li
Out of 200 crypto projects worldwide, Binance Labs has invested in multiple Indian projects, including Polygon, EPNS, and pStake Finance
At a time when Coinbase and many other giant crypto entities such as Celsius, 3AC, among others, have fallen to the ground, cryptocurrency exchange Binance is fast capturing the users who were earlier trading on other platforms by offering zero-fee bitcoin trading.
More importantly, while Coinbase Ventures and other crypto funds are going slow on investments, Binance, having invested in over 200 crypto projects, is bullish on investing in crypto startups including Indian startups.
The cryptocurrency industry in India is also going through a tough time with the government imposing 30% tax on profit from crypto investments and 1% TDS on crypto transactions. However, speaking to Inc42, Ken Li, executive director, Investments, Binance said that while the implications of the tax are still not clear, the platform is focused on “long-termism” of the founders and their tenacity.
Binance Labs is the crypto investment platform of Binance. It invests in technical teams that build and support decentralised web. It has invested in over 200 projects across 25 countries so far, including India.
In an exclusive interview with Inc42, Li talked about Binance Labs’ investment mantra and strategies, plans for investing in Indian startups, crypto winter, among other issues.
Edited excerpts from the interview:
Inc42: Tell us about Binance Labs’ investment strategy.
Ken Li: At Binance Labs, we prioritise fundamentals and long-term investing. Our investment team carries out deep analysis on each Web3 project from multiple dimensions — business model & profitability, product-market fit, team structure, and more. For token deals, we also conduct due diligence on the tech quality, tokenomics, and use cases. Most of our deals have a simple structure and clear ownership.
Inc42: How many startups have you invested in so far? What is your ticket size?
Ken Li: Since 2018, we have invested in more than 200 projects from over 25 countries. We’ve also incubated about 50 global projects that are native to Web3 via the Binance Labs Incubation Program. Our graduate projects include Polygon, Perpetual Protocol, Injective Protocol, Dune Analytics, Safepal, and Cere Network. The ticket size varies on a case-by-case basis.
Inc42: How many Indian startups have you invested in so far? What is your investment plan regarding Indian crypto/Web3 startups?
Recommended For You:
Ken Li: The large base of tech-savvy and aspiring crypto entrepreneurs in India has the potential to spawn technologically-competent enterprises in the blockchain space.
Polygon, cofounded by Sandeep Nailwal, is one of our early incubation projects. The project has steadily developed to become one of the most adopted solutions in the Web3 industry with more than 3,000 dApps. We continue to be in close connection with their investment team for ecosystem value creation and deal synergy.
Earlier this year, Binance Labs made a strategic investment in pStake Finance, a liquid staking protocol that aims to unlock the liquidity of staked assets.
We’re actively monitoring India’s crypto environment to identify the best market approach and attract more local engineering talent.
Inc42: How do you shortlist a startup for funding? What are the key parameters that you look into while shortlisting a startup?
Ken Li: We focus on game-changing Web3 projects that have the potential to positively impact the BNB Chain and the overall blockchain industry. The parameters include but are not limited to the business model, product innovation, team quality/background, and use cases.
Inc42: Lately, we have seen a variety of startups blooming in the areas of blockchain, crypto, Web3, DeFi, NFTs, Metaverse, and so on. What is your priority with regards to short-term and long-term investment plans?
Ken Li: We’re currently wrapping up the applications for Season 5 of the Binance Labs Incubation Program. In the short-term, we’ll conduct due diligence on applicants for inclusion in the program and invest in these Web3 entrepreneurs from various sectors, including infrastructure, DeFi, Metaverse, SocialFi, and crypto fintech.
In the long-term, we’ll continue to take a sector-agnostic and chain-agnostic approach to support quality Web3 projects at the earliest stage. This is part of our vision to drive innovation and wider adoption of blockchain technology.
Furthermore, the BNB Chain team continues to deliver scalable smart contract support for decentralised applications and innovative developers across DeFi, NFT, GameFi, public goods and Metaverse. The priority is to help developers in creating scalable Web3 dApps using BNB Chain’s modular design and scaling solutions. The BNB Chain is a multichain framework that includes the BNB Smart Chain, the BNB Beacon Chain, and sidechains.
Inc42: What’s been the impact of crypto winter on investors so far? Has it slowed down your pace of investment?
Ken Li: Because we focus on the long-term, the current market downturn doesn’t have a material impact on our investment pace or strategy. In fact, this “cool-down” period allows us to partner with the most committed founders who centre their efforts on building innovative products – there is much less hype, noise, and speculation.
Inc42: What is your assessment of the current scenario coupled with India’s 30% crypto tax and 1% TDS? Has it impacted your investment timeline in India?
Ken Li: The implications of this are still unclear. But our general perspective is that at the stage we invest in, the most important quality is the long-termism of the founders and their talent & tenacity. Great founders can succeed regardless of any externalities.
Inc42: What is your exit strategy with regards to crypto and Web3 investments?
Ken Li: We are not looking to exit quickly from projects. We identify emerging Web3 projects with high potential and support them throughout the growth stage. Our portfolio management team will provide tailored resources and long-term advisory on multiple fronts, including operations, marketing, and business.