Polygon raised $450 million in its first institutional round from a marquee list of investors. Nailwal claims they could have raised $200 million more but decided to stop at $450 million
Until a few years ago, Polygon, a startup created to make transactions on the Ethereum blockchain faster and cheaper, found it hard to attract investors. VCs didn’t want to invest in founders who didn’t have an IIT pedigree or were not keen on blockchain scaling solutions. Founders Jaynti Kanani and Sandeep Nailwal somehow kept their hopes alive, raising amounts by issuing Matic tokens to fund projects.
But things changed this week, signalling a dramatic shift in fortunes not just for Polygon but the larger Web3 and cryptocurrency universe. Polygon raised $450 million in its first institutional round from a marquee list of investors that included SoftBank, Tiger Global, Sequoia Capital India, Reddit founder Alexis Ohanian and Kevin O’leary of Shark Tank fame. It had over 39 investors in all. Nailwal said they could have raised $200 million more but decided to stop at $450 million.
With over 7,000 decentralised applications or dApps running on its network as of December 2021, it wants to be the Amazon Web Services of Web3.
Polygon, which also counts Mark Cuban and Balaji Srinivasan as investors, is among the top 20 crypto-tokens globally. Formerly called Matic Network, it was founded by Jaynti Kanani, Sandeep Nailwal, and Anurag Arjun in late 2017, with Serbian engineer Mihalio Bjelic joining later as a cofounder. In this interview with Moneycontrol, Kanani and Nailwal spoke about the funding round, their vision for Polygon, India’s future in Web3, and why Ethereum will win against Bitcoin. Edited excerpts:
It has been a tale of two extremes for you. Initially, you did not get any VC interest but now you’ve raised a round where you have over 39 investors…
Sandeep: We had to stop at $450 million. If we wanted to, we could have raised another $200 million, but since some very good investors came in, we said ok let’s take them.
Raising this time was very easy. Of course, it took time; I mean, most of these, like Sequoia, Tiger Global, etc do their own due diligence and want to understand the overall business model and so on. We started two-three months back, and they kept getting their new companies applying to them with their slides mentioning Polygon, many of these who want to come into Web3… So, they realised that okay, there is something big happening, which they are not a part of.
And then, once when they spoke to us, things were very clear to them about where we are headed.
Jaynti: Before, it was different. We were new, so it was obviously hard for them to believe anything we had done at the time. But now, Polygon is a clear winner. If you see DeFi or gaming, everyone is kind of building on Polygon. It is kind of leading the whole ecosystem.
So, for them now, it’s taking the lead on this thing plus the ecosystem project. We have huge ecosystem projects building on Polygon. So, for them, there are two things, one is Polygon, and (the second is) being very close to the ecosystem projects building on Polygon. It’s a win-win for them. They will now see who all are building on Polygon, watch them, advise them and invest in them early on. It’s kind of like betting early on Internet platform companies.
I would say raising was easy, but reaching that point was not easy. People spend a lot of time raising instead of building. We actually spent a lot of time building and raising was easy.
If you could have raised more, why did you stop at $450 million?
Sandeep: Already there’s a certain amount of dilution that we want to do and not beyond that. Apart from that, why do we even need that much money? We just wanted to secure a 3-5 year runway, because now Polygon has 7-8 different product lines. And then we wanted to secure 3-5 years of the runway for each of those teams, plus a $100 million ecosystem fund, and then some buffer for the treasury.
That was our simple goal. And, this was already enough money, and we did not need more. But, there are more marquee investors who are evaluating Polygon. So, we stopped because some of them might come on board. And if they do, then maybe we’ll do something more.
So is this an ongoing round?
Sandeep: The […]
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