Venture Capital

Venture Capitalists Flooded Money In To Crypto Space In 2021

The total market cap of cryptocurrency reached $3 trillion in 2021, according to a report by PitchBook Data.

The rise in market cap came as venture capital funds across the world invested about $30 billion into cryptocurrency in 2021 

Venture capitalists investing in consumer startups are writing more checks for crypto companies than ever before. The deals underscore how blockchain technology is reshaping industries like gaming and e-commerce, and insurance pushing long-standing consumer investors to remake themselves as crypto backers. Investors have poured $3.7 billion into cryptocurrency-based gaming, commerce, and shopping startups this year, including non-fungible token marketplace OpenSea 

The cryptocurrency industry is still in its infancy, and there is infinite room for growth. Many VC firms are aware that the future belongs to crypto, and they don’t want to miss out on what may well be the biggest investment opportunity of our time.

Even so, the crypto market is still volatile, but VC firms that are confident in blockchain and cryptocurrency companies are ready to assume additional risk. Although considered a traditional financing approach, VC funds are increasingly looking to crypto due to mainstream adoption. It is attributable to major advertising platforms like Facebook and Google deciding to lift their ban on crypto advertisements. Furthermore, with mainstream adoption by institutional investors, VCs are viewing the crypto industry as a less risky investment. The DeFi space and the non-fungible token (NFT) market are some of the most popular areas in the crypto industry attracting venture funds.

Top VC firms investing in blockchain and cryptocurrency are

Digital Currency Group, NGC Ventures, Coinbase Ventures, Pantera Capital, Plug and Play Tech Center, Fenbushi Capital, Andreessen Horowitz, Lightspeed Venture Partners with Digital currency group making highest 197 Blockchain and crypto deals and Fenbushi Capital with lowest 133 Blockchain and crypto deals

The biggest transactions that led the crypto investment to touch the $30-billion mark were -a $1-billion funding raised by crypto derivatives exchange FTX, Custodian New York Digital Investment Group raising $1 billion, blockchain integration tool-provider, Forte, closing a $725-million funding, MoonPay securing funding of $555 million, and NFT platform Dapper Labs raising $350 million, 

Coinbase’s Fred Ehrsam and former Sequoia partner Matt Huang have raised $2.5 billion for Paradigm One. It has surpassed Andreessen Horowitz’s crypto fund from earlier this year, which had raised $2.2 billion. Paradigm’s founders see tokens as promising long-term investments.

Venture capitalists in Europe invested a record $2.2 billion into crypto and decentralized finance (DeFi) companies in 2021, according to data from Dealroom. They are backing markets for digital assets such as NFTs; payments infrastructure; decentralized finance, startups. French soccer-focused NFT-trading platform Sorare became a unicorn in 2021 after it raised a $680 million Series B funding round led by Japanese conglomerate SoftBank.

London-based crypto payments firm Ramp, which recently raised $53 million is led by Balderton Capital with participation from existing investors NFX, Galaxy Digital, Seedcamp, Firstminute Capital.

Crypto exchange platforms CoinDCX and Coinswitch Kuber – the two new crypto unicorns in India have alone raked in almost 60% of the capital raised this year.CoinDCX raised $90 million in a Series C funding round at a valuation of $1.1 billion, becoming the first Indian cryptocurrency exchange to achieve unicorn status amid regulatory uncertainty over crypto assets.

The funding was led by B Capital Group, founded by Facebook co-founder Eduardo Saverin. Existing investors such as Coinbase Ventures, Polychain Capital, Block. one, and Jump Capital also participated in the round.

Cryptocurrency exchange Coinswitch Kuber on October 6 said it has raised over $260 million led by new investors Coinbase Ventures and top Silicon Valley fund Andreessen Horowitz (a16z), bumping up its valuation four times in six months to $1.9 billion.

Reasons why Venture capitalists pouring billions of dollars in crypto

  • Blockchain specific public ledger is a potential market disruptor when it comes to changing the way traditional payment setup works as blockchain based transactions can be verified by anyone if they have access to internet
  • Despite the price volatility, top merchants are letting consumers pay using Bitcoin and Altcoins. With consumers getting access to inventive crypto-related services in the future, the acceptance is only expected to move forward from here.
  • Cryptocurrencies are slowly making the space more autonomous by cutting out middlemen that are in control of our hard-earned money.
  • Developers across the world are relentlessly contributing to the crypto mining space,   whilst strategizing newer ways to make the process less energy-intensive in time.In addition to that, new crypto players are showing up each day with better transactional speeds, improved software development setup, and the ability to generate blocks quicker
  • Investors across the world are investing big and going long on cryptocurrencies. According to triple-A data as of 2021, estimated global crypto ownership rates at an average of 3.9%, with over 300 million crypto users worldwide. And over 18,000 businesses are already accepting cryptocurrency payments.
  • One of the major global acceptance drivers for crypto has been the interest shown by the  players like Microstrategy and Tesla.Tesla buys $1.5 billion in bitcoin early this year with holding 42,902 Bitcoins and MicroStrategy now holds a total of 121,044 bitcoins, worth nearly $7 billion at current prices.
  • With El Salvador being the first country to declare Bitcoin as a legal tender and governments across the world looking forward to regulate the space 

For those who believe in the objective traits of money, cryptocurrency comes forth as an optimistic change. Price surges aside, most popular cryptocurrencies like Bitcoin and Ethereum have shown tremendous value, urging investors to foray into this space, from a more inclusive point of view. 2021 seems to suggest yet another shift for blockchain and cryptocurrency, which could position these technologies even more favorably than their former highs.

There is a myriad of factors contributing to the push we are currently observing. One of the most significant among them is the increase in industry readiness, both from a technical and ideological perspective. We believe and think decades into the future it’s very clear the largest entities in the world will be powered by tokens.

If you are a crypto investor and you are still in doubt about the crypto space, follow Venture capitalists and big money.

Harish Kumar
Klever Writer

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Harish Kumar (5)

I’m an India-based news writer for Klever. Graduated from Ramaiah Institute of Technology with a bachelor's degree in Biotechnology. Worked as supply chain Engineer in Bangalore. I’d like to research Web 3.0, Cryptocurrencies, and the decentralized future while sharing the knowledge with you.

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