While start-ups in India brace for a lengthy funding winter, the 11-month-old blockchain platform, 5ire, made news by becoming the 105th unicorn after raising $100 million yesterday. The sustainability blockchain start-up's valuation stood at $1.5 billion following the Series A funding round from UK-based Sram&Mram Group.
Pratik Gauri, 5ire's Co-Founder and CEO, tells Outlook Business how the company was able to raise funds, despite its product being in the test net phase and having zero revenues currently.
How did 5ire raise funds despite the ongoing slowdown in VC funding and crash in the crypto market, which has given investors jitters?
Since 5ire is agnostic of the bull or bear market, market conditions do not affect us. We were founded in August 2021 and raised our first round in October, $21 million at a valuation of $110 million. This February, we had a $100 million capital commitment from Global Emerging Market. We have not drawn down on the money because we can only do that if we go public.
Our latest Series A equity round of $100 million on a $1.5 billion valuation makes us the world's fastest-growing unicorns because we hit the mark in 11 months. So, what Google did in web1 and Facebook did in web2, 5ire is doing in web3.
How did you leverage your sustainable blockchain USP to make inroads into various domains?
We created a Layer 1 (L1) blockchain infrastructure, the first in the world, with the 17 UN Sustainable Development Goals (SDGs) embedded within it. We then scraped data from 650 ESG sources to develop a new consensus called Proof of Benefit (PoB).
Blockchain has received criticism for its high use of energy, with some countries even banning mining on this count. However, does 5ire address these concerns?
As a sustainable blockchain, we don't use mining. Other blockchains adopt Proof of Work (PoW) or Proof of Stake (PoS) consensus. PoW uses more computational power because the more computers you have, the higher the chances of validating the block, which is not energy efficient.
In PoS, you must put more money in the system to get the block rewarded, so you are not solving the problem of the financial inclusion of 1.5 billion people who lack access to traditional banking. These two prevalent consensuses are used by most blockchains, whether it is Ethereum or Solana.
We changed the consensus and built our own—PoB—following the principles of the fifth industrial revolution, which pivoted from a for-profit paradigm to a for-benefit one. It is the world's first mathematical model that measures sustainability and financially rewards all sustainable practices.
We also validate blocks or nodes differently by tokenising 17 SDGs and putting them into a consensus, giving a weighted average for every SDG along with 650 ESG indicators.
The mathematical score—a weighted average of all sustainable practices—determines how the block is evaluated. The higher the score, the more the chances of validating the block. So, only the most sustainable players will make money if they use 5ire as their L1 blockchain.
What sets 5ireChain apart from the competition?
We have a no-code smart contract, which means one doesn't need to know about blockchain to code, unlike other blockchains. Also, our Gas fee, which is the transaction cost, is just one-tenth of a cent, which is way lower than other blockchains, be it Ethereum or Solana. So, we have plugged all the gaps currently in the blockchain.
And this has helped you reach out to your target customers?
Yes, this is why government agencies and large corporates are testing with us. This is also why we got the $1.5 billion valuation in the pre-revenue phase, based on 12 patents—8 are pending—and our PoB consensus. We are still in the test net phase and will launch our mainnet, the alpha version of 5ireChain, in November. Any developer can build a decentralised application on top of 5Chain.
Which sectors in India have responded positively to your blockchain solutions?
We are currently testing our product with over 10 B2B players, comprising billion-dollar companies or government agencies. In India, we are doing multiple use cases with Intex, including their patents and supply chain, workforce company Eagle Hunters and FMCG company Vi-John.
We are also working with the Muzaffarnagar Police on seven use cases, including FIR and employee records on a blockchain. On a global level, some government agencies we are testing include the Nebraska Police and the Nigerian Agriculture department.
How will you utilise the latest $100 million funding?
We have 105 employees in-house and 80 technology consultants. We will invest extensively in our research team to stay innovative. Research because the web3 space keeps changing almost every hour, and we want to be ahead of the game. Since we are working with the government and large corporates, we will hire C-suite executives to gain access to these clients. Moreover, we will invest in augmenting our technology infrastructure. We will also allocate some budget for M&As of companies working around the fifth industrial revolution.
What is the quality of blockchain coders in India, given that this is a new area?
Since the ex-director of UC Berkeley is on our advisory board, we work with the institution for people. However, the talent in India is massive. We use Rust as our programming and coding language, and it isn't easy to find people who know it, and they are expensive resources. So, we hire good coders and train them in-house to learn it on the go. We have also started sponsoring hackathons with different universities to train youngsters in Rust and absorb them into the workforce.
How big is the market that you are planning to tap?
Before the crash this year, the blockchain market was estimated to be around $2 trillion, and I expect it to touch $10 trillion soon. We want to capture 20 per cent of the market within the next four years.
After launching our mainnet in November, our three-year revenue estimate is $1 billion because of large-scale adoption. India will be the biggest operation hub and a revenue generator.