$564M in fresh funding, but no home for it? — India’s web3 market is running on pure chaos

A few years ago, India’s blockchain landscape was a playground for retail traders dealing with crypto assets. Today, everything is different.

The India Web3 Landscape Report 2024, published by Hashed Emergent, reveals key shifts in startup funding, enterprise adoption, developer activity, and regulatory trends, painting a clear picture of the industry’s evolution.

One notable finding among these is India’s unique position in cryptocurrency adoption. According to Chainalysis, the country has topped the global rankings for the second consecutive year, cementing its role as a major force in the digital asset economy.

The startup ecosystem has played a huge role in this growth. Investments have been largely directed towards core blockchain infrastructure and financial services, while entertainment-focused sectors such as Web3 gaming and digital collectibles have struggled to raise fresh capital.

But momentum alone is not a guarantee of a smooth ride. Expanding beyond the initial stage remains challenging, as access to large-scale financing still remains a barrier.

Many Indian founders have turned to alternative funding models such as international Web3 funds and token crowdsales to stay afloat.

Regulatory uncertainty adds another layer of complexity. High taxes on cryptocurrencies and strict anti-money laundering regulations have led some startups to set up operations overseas in search of favourable jurisdictions.

So where does the Web3 ecosystem stand in India then? To answer this question, we analyse the report findings by examining investment trends, enterprise adoption, developer activity, and the regulatory forces shaping the future of blockchain in the country.

Following a period of cautious investor sentiment, Hashed Emergent’s report highlights a sharp increase in funding, with blockchain startups expected to raise $564 million in 2024 – a 109% increase over the previous year.

This improvement follows a slowdown in 2022 and 2023 as regulatory uncertainty and global market conditions dampened investor enthusiasm.

India currently has over 1,200 Web3 startups across decentralized finance, blockchain infrastructure, and entertainment. Although total funding in the sector has now exceeded $3 billion, the investment pattern has changed.

Infrastructure projects have become the top priority, attracting the bulk of new capital – a sign that investors are betting on the basic layers of blockchain rather than speculative applications.

Infrastructure-focused startups raised $437 million in 2024, up 224% from 2023. The majority of this funding was spent on improving layer 1 and layer 2 scaling solutions, decentralized physical infrastructure networks, and middleware platforms.

The financial services sector has also shown renewed interest, with investments in blockchain-based financing growing from $55 million to $86 million in 2023.

DeFi-related funding has surged, particularly in areas such as staking, liquid staking, tokenized real assets, and multi-chain financial products.

However, not all sectors benefited from this momentum. Funding for entertainment-related blockchain projects, including Web3 games and digital collectibles, dropped from $60 million in 2023 to $41 million in 2024, reflecting a drop in investor interest. Despite the overall improvement, raising large amounts of capital remains a barrier, especially for later-stage startups.

The lack of mega-investment rounds (over $100 million) since 2022 reflects continued caution among domestic investors, many of whom remain hesitant due to high taxes on virtual digital assets in India and ongoing regulatory uncertainty.