Accel’s pick-and-shovel play in India

In 2018, investors and peers in FalconX co-founder Raghu Yarlagadda’s circles could not fathom why it aspired to be in the crypto space, seen as dangerously unregulated then. They were also puzzled by its focus on institutional clients rather than retail ones.

But two events, spread across two years, helped the digital-asset trading platform stay the course and ultimately notch up a valuation of $3.75 billion (as of August 2021).

In May 2018, Accel India became the first venture-capital firm to invest in FalconX. “Accel believed in our conviction. They saw the data,” said Yarlagadda, the startup’s CEO. “Shekhar (Kirani) played a huge role in supporting that major decision-point to focus on institutions.”

Kirani is a partner at Accel. There was another reason that drove the investment: FalconX co-founder Prabhakar Reddy had worked at Accel for two years before launching the startup. 

The second defining moment was the pandemic. During the first wave of Covid-19, central banks globally printed a lot of money. “In that inflationary regime, hedge funds believed that bitcoin could be a hedge, very similar to gold,” Yarlagadda recounted in the Insights podcast curated by Accel in November last year. “The world was badly looking for a digital version of gold.”