SCB 10X, the venture capital arm of Thailand’s oldest bank, is holding on to its investments in blockchain and digital asset infrastructure, which it believes will serve the bank in the long run, despite a market downturn that has wiped out crypto industry giants, including former portfolio company BlockFi.
“We’re a serious investor, we are not tourists. We are here for the long term because we really believe blockchain technology is game-changing and a paradigm shift,” said Mukaya Panich, CEO of SCB 10X.
As cryptocurrency prices crashed, and with many companies facing insolvency, SCB 10X sees its role as shoring up viable projects and advising its 40 portfolio companies to improve their products and monetization plans ahead of a market rebound.
“We continue to invest and actively source deals and founders to come to our incubation program,” Mukaya said. This stands in contrast to a slower year for most venture capital specialists in an environment of inflation and rising interest rates, conditions that have not spared even tech giants Meta and Grab from layoffs and profit pressure.
“We came from a bull market, and people were just focused on building, but they didn’t think deeply enough about how they’re going to generate revenue,” she added.
SCB 10X’s fintech portfolio includes GoTo, the holding company of Indonesian superapp Gojek, Swiss-based digital asset bank Sygnum and Thai payments developer Opn. But the VC has also invested in blockchain, digital-asset, and Web3 projects, aiming to find the next Thai unicorn. With a domestic market smaller than Indonesia’s, and one that is not growing as fast as Vietnam’s, Thailand lags behind its neighbors in terms of startups valued at more than USD 1 billion.
“When we created SCB 10X three years ago, we focused on building in the area that could be global from day one, and that is blockchain,” said Mukaya.
The vision is for the 110-year-old Siam Commercial Bank to eventually be a customer for the projects built by SCB 10X as it expands into transactions in digital assets, on top of fiat currency. “If we could actually create a synergy with the bank, it can be quite powerful,” Mukaya said.
This reflects a shift in traditional banks’ thinking. They are beginning to see blockchain and its applications in decentralized finance, or DeFi, as an opportunity rather than an existential threat. In a recent report, the Singapore Fintech Association identified distributed ledger technology, central bank digital currencies, and custody solutions as opportunities to integrate traditional banking with DeFi.
“We think that in the future, the bank should be able to use DeFi as the back-end operation to make these very efficient and reduce the number of people and paperwork,” said Mukaya. SCB is Thailand’s fourth-largest bank by assets.
Mukaya also sees an opportunity overseas to sell products built by SCB 10X portfolio companies that local banks may not be ready for, such as quantum computing developed by Vancouver-based 1QBit to detect fraud and optimize trades. “Right now the technology is probably a bit too advanced for Siam Commercial Bank, but some banks in Europe are already preparing to be quantum-ready,” she said.
To find these startups, the VC organizes hackathons and enlists founders for six-month incubator stints. It recently opened a 1,000-sq.-meter coworking space in central Bangkok for its portfolio companies and incubation program.
Mukaya, who was sent to the U.S. to study engineering on a royal scholarship, realized where her strengths lay after observing her more creative classmates at the Massachusetts Institute of Technology.
Now, the qualities she saw in those classmates are what she looks for in founders, whom she said should have an experienced team and a monetization strategy, on top of a unique and differentiated product.
“I think I can be an enabler. Either I will work in a startup and help grow that business, or I will be the investor,” she said. She helped build a Silicon Valley startup that was acquired by Broadcom for USD 2.2 billion, before pursuing an MBA at Harvard Business School and working as a portfolio manager.
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In June, SCB 10X engineered a merger of two of its portfolio companies, Singapore-based crypto analytics platform Nansen and DeFi portfolio dashboard Ape Board.
“Our objective in building is to create a startup that could become a unicorn,” said Mukaya. Thailand has only four unicorns, including crypto exchange Bitkub, whose acquisition by SCB fell through in August after the market turned and regulatory scrutiny intensified. SCB launched digital asset trading on its own securities app, InnovestX, less than two months later.
SCB 10X invested in the USD 50 million Series C round of BlockFi, the crypto lender that filed for bankruptcy in the U.S. last month. “BlockFi was less than 1% of SCB 10X’s portfolio exposure,” said Mukaya, adding that the VC wrote off its investment in BlockFi in August.
Remaining portfolio companies “all have a runway of more than four years,” she said.
“They have raised enough money during the good times, so they have a long runway to survive the crypto winter. And there are a lot of good opportunities right now in the market for acquisition,” she said.
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.