As someone who began his career in the pharmaceutical industry as a cancer researcher, Ganesh Swami’s journey to starting blockchain data analytics startup Covalent and setting out to build the ‘Google of blockchain’ was not a predictable one.
While in the pharmaceutical industry, Ganesh – who is an engineering physics graduate from Simon Fraser University – saw that it took upto five years to get pharma products to the market, while his engineering peers were building tech products, getting funded and going through liquidity events in 18 months or less.
Feeling like he was missing out, Ganesh shifted to the Big Data industry – a move that later prompted him and co-founder Levi Aul to launch Covalent, a Vancouver-based startup providing a unified API bringing visibility to billions of blockchain data points, in 2017.
“Blockchain was an exciting new technology, but for it to achieve mainstream adoption, we realised it had to speak to and work in tandem with existing technology, processes and talent. There was a need for middleware connecting the blockchain world to existing infrastructure. This inspired us to launch Covalent,” Ganesh says in an interaction with YS Founder and CEO Shradha Sharma.
The startup looks to solve infrastructure problems inhibiting blockchain adoption by bridging the world of centralised databases with the new world of distributed blockchain technologies.
Covalent cofounders Ganesh Swamy (left and Levi Aul (right)
The Google of blockchain?
Over the last two decades, Google emerged as the industry leader in indexing and compiling data across the Internet at scale. With Covalent, Ganesh aims to index the entire universe of blockchains and continually add new data and information.
Till date, Covalent has worked with over 100 projects and indexed billions of rich blockchain transactions, including every transaction since genesis for over 12 top blockchains such as Ethereum, Binance Smart Chain, Polygon, Polkadot, Elrond, Near, and more, Ganesh says.
“Although blockchain data is public, retrieving it in a reliable fashion is extremely difficult. Developers have to download terabytes of data and crunch the numbers just to answer simple user queries asking about their account balances. Further, the work has to be repeated across teams building financial products on blockchain,” he adds.
That’s where Covalent comes in.
The startup is solving this problem by allowing developers to integrate the startup’s unified API in blockchain products and allow users to easily view historical transactions and account balances, among others.
“There’s no UI or buttons you can click. Our solution is targeted at developers who can use our API at the click of a button and display it in whatever fashion they deem fit,” Ganesh says.
Supply-focussed revenue model
The startup initially employed a SaaS model and charged developers a fee for using its API.
But now, new developers are not Covalent’s paying customers.
After the startup raised two rounds of funding totalling $5.1 million and turned profitable in 2020, it pivoted to monetising the startups who have built top blockchains.
“The demand for our product came from developers and the supply came from the blockchain projects we index. But many blockchain developers and their startups may not have product-market fit and cannot themselves build a solution like ours. Since the opportunity was huge, we positioned ourselves to monetise the supply side, i.e the blockchains now pay us for access to the developers,” Ganesh says.
Later this year, the startup plans to launch the Covalent network and move one step closer towards true decentralisation.
Once launched, the decentralised network will allow the supply (blockchain networks) and demand (developers) to directly transact with one another, acting as a public utility that anyone can tap into.
How Covalent was built
Covalent’s first version was built in a weekend in 2017 at a distributed systems hackathon. After winning the hackathon, Ganesh decided to turn it into a hosted service and start commercialisation.
At the time, the blockchain and crypto world was experiencing a slowdown, and the startup found few customers. It was only during 2019 and early 2020 that the industry came back to life on the back of a renewed attention towards stablecoins, decentralised finance applications, and later, NFTs.
“We were anxious for the first one-and-a-half years since we had almost no traction. We started seeing traction in 2019 and became profitable in 2020. This gave us a major sigh of relief as we were bootstrapped till then, and we becoming profitable meant we didn’t have to worry as much about our runway. That’s when we began focussing on building a sustainable product for the future and raised capital from outside,” Ganesh says.
Covalent’s key differentiators
Covalent is building for a future wherein mainstream adoption of blockchain technology becomes a reality and major fintech players look to add a decentralised finance experience to their products.
In such a future, the startup aims for its API to be the “perfect match” to provide fintech players with visibility on blockchain data points to provide account balances, historical activity and transactions to their users.
“There is definitely competition in the market, but our talent, product and community are our key differentiating factors,” Ganesh says, adding that while rivals can also build strong teams and products, the community cannot be copied.
“We are proud of our alchemist community programme – a growth and leadership initiative with over 2,000 community members who carry forward the Covalent message. We have allocated one percent of our equity to fund it,” he adds.
Building a decentralised future
Going forward, Ganesh believes Covalent can follow in the footsteps of Google and other search engine/indexing giants, albeit in the decentralised world of blockchain.
With a new era of innovation among blockchain startups in India and the world, Ganesh believes tech giants in power will become more respectful towards and protective of user data, and that Covalent will play a role in ushering in an age of easy access to decentralised data.
“Some countries remain skeptical about blockchain technology. Covalent can help bring transparency and visibility to financial transactions and address the problem. Mainstream adoption can be accelerated by large organisations in leadership positions taking blockchain products and pushing them, like how Jio went about bringing the Internet to the Indian masses,” Ganesh says.
