VC investors in 2021 poured more money into crypto-assets than the prior 10 years

    23 Dec 2021

    This year, venture capital funds have infused over $30 billion into the crypto sector, which is more than the previous 10 years combined for the new blockchain technology. According to PitchBook Data, that’s almost four-fold the prior high of about $8 billion in 2018, the year following Bitcoin’s 1,300% surge. Fearing to miss out, numerous investors jump in the hot topic.

    Spencer Bogart, the general partner at San Francisco-based Blockchain Capital, is one of the largest investors in the industry after financing more than 120 companies since its inception in 2013.

    “We’ve moved beyond just digital gold,” he told Bloomberg. “We’ve got financial services, art, gaming as a subcategory of NFTs, Web 3.0, decentralized social media, play-to-earn – all of that made investors think, `We don’t have enough exposure’.”

    As other established firms such as Coinbase Ventures, Digital Currency Group, and Polychain Capital bet on the next big crypto thing, all kinds of experimental projects secured funding, such as a social media app that turns celebrities into tokens, a play-to-earn NFT game inspired by Elon Musk or a collectible consisting of a list of words.

    “Investors are funding anything and everything,” PitchBook analyst Rob Le said.

    According to Bogart, the sudden emergence of NFTs, which was once considered niche sectors, showed investors what they might be missing out on, noting how the once obscure online NFT marketplace OpenSea is now drawing comparisons to the e-commerce site Etsy. In addition, the $30 billion tally includes fundraising rounds raised by the likes of Robinhood Markets and Revolut, revenue-generating financial technology companies that merely touch crypto.

    But looking strictly at US venture capital transactions also shows outsize investing this year with some $7.2 billion in deals, four times the previous record set in 2018, according to PitchBook data.

    For instance, in July, crypto derivatives exchange FTX closed a $1 billion Series B funding round that pushed its valuation to $18 billion. Custodian New York Digital Investment Group raised $1 billion in mid-December, seizing more than $7 billion in valuation. Forte, a provider of blockchain integration tools for game publishers, closed in November a $725 million fundraising round.

    Dapper Labs, the NFT platform behind CryptoKitties, raised $350 million in March from investors that included basketball legend Michael Jordan, pushing its valuation to $2.5 billion. Crypto payments infrastructure provider MoonPay, closed a $555 million round in late November, increasing its valuation to $3.4 billion. Sky Mavis, the developer of Axie Infinity, raised more than $150 million at a $3 billion valuation in October for the crypto-based online game.

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