Although crypto firms are languishing and downsizing through the crypto winter, the sector still seems ripe for investment. According to a report from PitchBook, a financial data company, VC investments in crypto start-ups stood at around $9.7 billion in Q1 of 2022.
At the beginning of June, about two-thirds into Q2, this figure stood at $5.3 billion. While this does indicate a slight dip from the previous quarter, it is still commendable given the bitter winter the market is going through.
It shows that investor faith in the crypto industry is surprisingly strong. And that, while funding in Fintechs has dropped considerably, it remains steady in the cryptosphere. This is because some of the most prominent venture capital firms continue to pump millions of dollars into this relatively nascent space.
Here’s a look at some of these VC firms and how they are shaping the crypto industry.
1. Andreessen Horowitz:
Established in 2012, Andreesen Horowitz, aka, a16z, is one of the best-known VC firms in the crypto space. Over the years, a16z has funded many renowned crypto projects, including Axie Infinity, OpenSea and Dapper Labs. The company also announced a $4.5 billion fund dedicated to crypto in May 2022. The fund size is about 1.3 times larger than its previous fund-raising rounds.
2. Binance Labs: This is the investment and startup incubation arm of crypto exchange Binance. It is known for identifying promising start-ups and infusing money into crypto projects that have not yet launched a token of their own. In June 2022, Binance Labs created a $500 million money pool to finance projects with use cases that can boost the adoption of blockchain technology and web 3.0. One of its famous investments is the move-to-earn project StepN.
3. Coinbase Ventures: This is the investment arm of the crypto exchange, Coinbase. Founded in 2018, the firm neither has a fixed fund size nor full-time employees. Crunchbase data suggests that Coinbase Ventures has 263 investments, with the latest being a $30 million seed funding of MoHash – a DeFi protocol. The company has also made investments in crypto businesses such as BlockFi, Etherscan, and Messari.
4. Digital Currency Group (DCG): Founded in 2011, DCG is known to have been one of the earliest Bitcoin investors. It focuses on building Bitcoin infrastructure and raising startups that create new digital assets. According to Crunchbase, it has 279 investments and two acquisitions in its pocket. In its most recent round, it funded internet protocol Bitmark with $5.6 million. Its most significant investments are in Ripple, ZCash, Coinbase and the Lightning Network.
5. Paradigm: This venture capital firm was founded in 2018 by Fred Ehrsam, co-founder of Coinbase, and Matt Huang, Partner at Sequoia Capital. Paradigm holds a stake in some of the largest crypto firms, including FTX, BlockFi, and Coinbase. Despite being a relatively young VC firm, it has investments in nearly 80 companies. In November 2021, Paradigm managed to create a $2.5 billion fund solely dedicated to crypto-related investments. The company is known to partner with early-stage crypto platforms, providing them with the funding and the guidance they need to get their ideas up and running.
First Published: IST