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The adoption of Web3 in India continues to grow, with over 1,000 startups emerging in the space, as per a report by Web3 venture capital firm Hashed Emergent.  

The report titled India’s Web3 Landscape 2023, which was created in collaboration with KPMGin India, Devfolio, Coin Switch, and Kratos Gaming Network (KGen), identified Bengaluru as an emerging hub for the sector. 

Notably, India’s share of the worldwide Web3 developer community has grown from 3% in 2018 to 12% in 2023 among the emerging markets. There has also been an increase in female participation, rising from 3% to 14% over the past five years.

“The findings of our second edition flagship report underscore India’s remarkable ascent in Web3 adoption and show that it is on a trajectory to become the global leader. With a large economy, skilled tech talent pool, and favourable demographics, the right conditions exist for a thriving Indian Web3 sector full of innovation and opportunity,” said Tak Lee, CEO andManaging Partner of Hashed Emergent. 

While the US leads globally with 26% of Web3 developers, India’s growth of 300% from 2018 to 2023 is among the highest among major markets.

“We believe the regulatory environment is evolving slowly in the right direction, and further positive regulatory developments are required to fuel growth. India’s Web3 sector is dynamic and vibrant. At Hashed Emergent, we are excited to witness and contribute to India’s journey towards becoming a powerhouse in the decentralised future,” Lee added. 

Funding and market opportunity 

The sector attracted ~$250 million in investments in 2023, marking an 81% decline from the total funding ($1.4 billion) in 2022. Findings reveal that in 2022, there were 62 Web3 deals, whereas in 2023, the number decreased to 47. 

Initially, web3 funding was heavily dominated by the finance sector, particularly investments in exchanges. However, there has been a shift towards diversification across sectors, with infrastructure projects emerging as the primary focus for funding in 2023.

Despite unfavourable macroeconomic conditions, pre-seed and seed-stage Web3 startups in India are still attracting interest from investors, the report revealed. 

“The increasing adoption of Web3 and blockchain across various sectors and industries is a big global opportunity for Indian tech talent and businesses. Blockchains have enabled various innovative use cases such as DeFi, real-world assets tokenization, self-sovereign identities, track and trace etc. which were not possible earlier. We are continuously innovating and participating to develop the ecosystem and help our clients leverage the power of blockchains,” said Krishna Tyagi, Head of Web3 at KPMG in India. 

Series A and subsequent funding rounds decreased as founders, after securing initial capital, chose to cut costs and forego additional funding due to the challenging funding climate. However, pre-seed and seed stage deals remained stable, primarily supported by local Web3 funds, corporate venture arms of Indian exchanges, and ecosystem funds, the report states. 

Additionally, there has been an increase in funding for startups operating in Web3 sub-sectors like finance, entertainment, and infrastructure.

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Consumer adoption

India secured the leading position for on-chain adoption among over 150 countries, with over 35 million trading accounts on the leading Indian exchanges in 2023. Around 75% of users on Indian centralised exchanges (CEX) are under 35 years old, with Bitcoin (BTC) and Ethereum (ETH) being the preferred assets among Indian traders.

Data has also revealed India making it to the top five in terms of peer-to-peer (P2P) trading volume. 

Among the surveyed Web3 gamers, 90% mentioned playing Web3 games primarily to earn NFTs and tokens, while 50% expressed enjoyment in the gameplay itself. Moreover, 29% of respondents spent more than Rs 1,000 on Web3 games, compared with just 10% for Web2 games.

The report further highlighted that major corporations such as Eros, Infosys, and Shemaroo actively participate in the Web3 ecosystem. Additionally, both the Indian government and over 50% of state governments are either planning or implementing initiatives that utilise blockchain technology. 

Headquartered in Seoul, Hashed Emergent is an early-stage venture capital fund primarily targeting companies operating in Web2 and Web3 technologies, with a particular focus on emerging markets, notably India.