Regardless of your perspective on blockchain-centered projects, venture capitalists appear to have made up their minds about the sector: Investments into crypto-themed companies — the web3 space, as its supporters call it — set records in 2021, records that could be beaten in 2022 if early data indicates where capital will flow this year.
The Exchange explores startups, markets and money.
Data from a new venture capital fund and recent funding rounds underscore the pace of deal flow the crypto market has ahead of it, indicating that bets placed on blockchain-related startups will continue despite some wobbly indicators from the decentralized market.
That there are believers in crypto in the market is not a surprise. The pace of investing may prove to be. For example, early PitchBook data relating to startups it categorizes in the “Cryptocurrency/Blockchain” sector raised around as much this January as all startups in Africa did last year — despite the fact that the African startup investment market is accelerating, as TechCrunch has noted.
This morning, let’s take a look at a few data points showing how rapidly the current pace of investment into crypto-focused startups is shaping up in 2022 and cast a quick glance at issues in the blockchain market that could, but are not, giving investors pause.
To the moon
The recent fundraise by FTX drew a host of headlines. Any time a private company scales its private-market valuation to the range of dozens of billions, it’s hard to ignore. That FTX raised $400 million for its main business — at a $32 billion valuation — less than a week after the company raised $400 million for its U.S.-based operations at an $8 billion valuation did not garner the shock that it should. That’s a simply tectonic sum of cash, and at prices that indicate that FTX sold a total of around 2% of the shares in both companies, or $800 million worth of investment into $40 billion worth of equity value.
But that’s not the only recent news event that underscores how big the crypto bets may prove in 2022. Alexis Ohanian’s Seven Seven Six venture firm just announced $500 million in two funds, that, per The Wall Street Journal, it will “invest primarily in crypto startups.”