Ethereum’s Layer Two scaling platform Polygon raised $450 million in its first major funding round earlier this year. Now, the protocol’s co-founder, Sandeep Nailwal, is launching another project, he told TechCrunch exclusively — this time in the form of Symbolic Capital, a venture capital fund built by and for web3 founders.
Nailwal, along with Cere co-founder Kenzi Wang, has raised $50 million from investors including other venture firms, Crypto exchanges, family offices, and institutions, although they didn’t share specific names. Symbolic plans to primarily support companies developing consumer-facing decentralized apps (dApps), Nailwal said, a move that appears consistent with Polygon’s own goal of accelerating Web3 app development.
“My main task is to bring Web3 to mass adoption, and that mass adoption will only come through apps. It’s not like I build a blockchain and people come and use the blockchain – nobody uses the blockchain directly. They always use it through an app,” Nailwal told TechCrunch.
The fund has already made around 15 investments, according to Nailwal, including Web3 gaming studio BlinkMoon, polygon-based metaverse Planet Mojo and esports platform Community Gaming.
As an Indian founder, Nailwal has often tried to support his native country — he made headlines last year when Vitalik Buterin donated $1 billion worth of crypto to an Indian COVID-19 relief fund he arranged. Through this new venture fund, Nailwal aims to allocate 80-90% of the capital to founders who, like him, are from emerging markets.
“It’s not closed to anyone building in Silicon Valley, of course not. But being from India I would technically be an angel investor or advisor to 95% of all good projects that would come from the Indian subcontinent – they would come to me one way or another for help or guidance.” said Nailwal.
Wang, on the other hand, is intimately familiar with the Web3 ecosystem in China and Southeast Asia, which gives the couple a broad perspective of countries around the world, Nailwal added. He generally sees founders in emerging markets as more pragmatic than their better-resourced counterparts in Silicon Valley because of the constraints they face.
“Because they’re all being pushed against the wall to survive, they need to build something that generates revenue and they can survive on that,” Nailwal said. He added that he took a similar approach to Polygon’s growth, where he said he would test one new technology at a time and wait until it gained a certain number of users before experimenting with the next idea.
This background is one of the reasons Nailwal believes Symbolic is particularly well placed to help founders in emerging markets.
“Many of them have the ability to build businesses that eventually acquire users, but you need to help them keep reinventing themselves and raising their bar so that once they have a proven model on a smaller scale, they continue to grow on a much larger scale and reinventing their ideas and business model,” said Nailwal.
A key motivation for creating Symbolic for Nailwal was the opportunity to more formally support companies already in its orbit, he said, adding that he didn’t feel he was devoting much extra time managing the fund as it will help him realize synergies from relationships he is already building, in part through Polygon’s own venture fund. He and Wang are already prolific angel investors in startups — the pair have co-invested in more than 40 companies since meeting at Binance Labs in 2019, he said.
Nailwal said that as part of Symbolic’s focus on apps, he’s particularly interested in startups that fall into the “creator economy” sub-sector, such as fantasy sports companies.
“In the Web3 fantasy you can have NFTs and you can rent these NFTs when you are not playing so you can earn passive income, also you can earn the tokens on the platform and become part of the platform from the very early days Stadium,” said Nailwal.
Those kinds of incentives can often make more sense for users in emerging markets, he added. He cited examples of recent user growth of Chinese move-to-earn app StepN and the appeal of play-to-earn video game Axie Infinity as an additional source of income for low-income workers in developing countries to illustrate his point. (Both Nailwal and Wang are angel investors in Axie Infinity’s parent company, Sky Mavis).
“Many of these crypto models are able to achieve a better sustainable economy in contexts where the cost of living is much lower,” Nailwal explained. India’s Jio 4G network is arguably the world’s fastest, reaching even deep rural areas, he added — a piece of infrastructure that could help Web3 startups attract users across the country if they offer the right economic incentives.
Some Web3 play-to-earn startups have been criticized for putting those already vulnerable at risk if something goes wrong, such as the $625 million hack that hit Axie’s Ronin bridge in March Infinity was committed. Nailwal acknowledged that risk is “an issue” and said he advises Web3 entrepreneurs to provide users with as much education and disclosure as possible whenever a transaction takes place on their platform.
A key differentiator for Symbolic will be the internal data platform the company has built to support its portfolio companies and strengthen its own due diligence process, Nailwal said. The platform will aggregate and analyze data such as GitHub posts, Discord engagement and token performance, and employment and hiring trends, the company said.
Eventually, Nailwal hopes to create a “proprietary social ecosystem” around the platform, which he likened to Y Combinator’s network.
“We want to do [this] both for the portfolio companies and for the founders, who we believe will eventually become angel investors in many of the new projects to come [through Symbolic]’ said Nailwal.