Out of the world’s 20 largest venture funds based on assets under management (AUM), 17 have invested in companies involved in blockchain technology or cryptocurrencies, implying that 85% of the world’s biggest investors have committed part of their funds to the space, a new research by Blockdata, a blockchain data and intelligence firm owned by CB Insights.
With 61 blockchain investments, venture capital (VC) giant Andreessen Horowitz is the most active investor in terms of the number of investments in blockchain companies.
Andreessen Horowitz has been investing in crypto since 2013, betting on companies such as Coinbase Global, a crypto exchange that went public earlier this year, Compound, a decentralized finance (DeFi) specialist, and Dapper Labs, the non-fungible tokens (NFTs) company behind viral blockchain-based video game CryptoKitties. Andreessen Horowitz is also a participant in Diem, a stablecoin project spearheaded by Facebook.
In June 2021, the VC launched a US$2.2 billion crypto-focused venture fund, the largest yet by one of the major venture investors.
After Andreessen Horowitz, IDG Capital is the second most active VC in blockchain and crypto, having backed 29 companies including the likes of Ripple, a currency exchange and remittance network, Bitmain, a company offering hardware and solutions for blockchain and artificial intelligence (AI) applications, and Circle, a blockchain paytech and stablecoin company.
Circle is best known for co-creating the US dollar-backed stablecoin USD Coin (USDC), alongside Coinbase and Bitmain. USD Coin has been one of the fastest growing stablecoins in the world, growing over 3,400% between January and July 2021.
Circle is planning to go public later this year through a merger with special purpose acquisition company (SPAC) Concord Acquisition Corp in a transaction that would value it at an enterprise value of US$4.5 billion, the company said in July.
With 24 blockchain investments, Sequoia Capital is the third most active VC investor. The firm has invested in companies such as FTX Exchange, a cryptocurrency derivatives exchange, Chainalysis, a blockchain data platform, and Filecoin, a decentralized storage network.
Sequoia Capital is followed by Lightspeed Venture Partners with 23 blockchain companies, Founders Fund (16), Accel (15), General Catalyst (13), Kleiner Perkins (11), Tiger Global (8), Insight Partners, New Enterprise Associates, Hong Kong DST Global and Institutional Venture Partners (4 blockchain companies each), GGV Capital (3), and Hillhouse Capital Group, Greenspring Associates and Norwest Venture Partners (1 each).
Top VCs investing in blockchain companies, Source: Blockdata, Sept 2021
Crypto exchanges as the preferred investment
So far, crypto exchanges have been these VCs’ preferred investment option. Out of the world’s top 20 venture funds, ten have invested in crypto exchanges, the Blockdata research found.
Lightspeed Venture Partners in particular has been significantly committed, single-handedly backing six different exchanges, including DeversiFi, a decentralized exchange, Blockchain.com, a crypto services platform, and FTX Exchange.
So far, 2021 has been a blockbuster year for blockchain and crypto funding. In H1 2021, companies in the space raised over US$7 billion in funding, more than any full year of fundraising in history, according to data from Blockdata.
The surge in blockchain fundraising was driven by mega-rounds of US$100 million and over, on the back of booming demand from both consumers and institutions. In H1 2021, mega-rounds closed a combined US$3.95 billion.
10 biggest funding rounds in blockchain and crypto companies as of July 2021, Source: Blockdata, Sept 2021
Big rounds are continuing in H2 2021. In July 2021, FTX Exchange raised the largest funding round to date, closing US$900 million at a staggering US$18 billion valuation. BlockFi, a wealth management and trading firm, is reportedly in talks to raise US$500 million in a deal that would value it at US$5 billion.
Blockchain.com, which started out as a blockchain explorer before expanding into a full suite of crypto services including trading and crypto services, closed a US$300 million at a US$5.2 billion valuation, the Wall Street Journal reported in March. Blockchain.com CTO told Fortune in an interview in August 2021 that the firm was considering an initial public offering (IPO) in 18 months or more.
Other crypto exchanges looking to go public in the coming months include Kraken, one of the world’s largest crypto trading platforms.
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