With digital assets and related projects exploding in popularity and many soaring in price, all manner of experimental projects are securing funding.
Need more proof that this is the year digital assets went mainstream? How about the fact that venture capital funds have poured about $30 billion into crypto, or more than in all previous years combined for the little more than a decade-old technology.
That’s almost quadruple the previous high of around $8 billion in 2018, or the year following Bitcoin’s more than 1,300% breakthrough gain, according to transaction data compiled by PitchBook Data Inc.
“We’ve moved beyond just digital gold. 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,”’ said Spencer Bogart, general partner at San Francisco-based Blockchain Capital LLC, one the largest investors in the industry after financing more than 120 companies since its inception in 2013.
As other established firms such as Coinbase Ventures, Digital Currency Group and Polychain Capital bet on the next big crypto thing, all manner of experimental projects — a social media app that turns celebrities into tokens, a play-to-earn nonfungible token game inspired by Elon Musk or a collectible consisting of a list of words — secured funding.
“Investors are funding anything and everything,” PitchBook analyst Rob Le said.
The sudden emergence of what was once considered niche sectors such as NFTs showed investors what they might be missing out on, according Bogart, noting how the once obscure online non-fungible token marketplace OpenSea is now drawing comparisons to the e-commerce site Etsy.
The $30 billion tally includes fundraising rounds raised by the likes of Robinhood Markets Inc. and Revolut Ltd., revenue-generating financial technology companies that merely touch crypto. But looking strictly at U.S. 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.
Crypto derivatives exchange FTX, for example, closed a $1 billion Series B funding round in July that pushed its valuation to $18 billion. Custodian New York Digital Investment Group raised $1 billion in mid-December, nabbing a more than $7 billion valuation. Forte, a provider of blockchain integration tools for game publishers, closed a $725 million fundraising round in November. 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 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 the crypto-based online game.
DAO (decentralized autonomous organizations) + NFT
Loot Project is a collection of 8,000 NFTs in the form of a text file consisting of phrases that depict “randomized adventurer gear” like “a short sword” or “divine robe of the fox.” The project was launched in August by Vine co-founder Dom Hoffman; investors are individual holders of the thousands of NFT loot bags which initially included Galaxy Digital’s Jon Kol
Decentralized Social Media
BitClout is a crypto social network that turns celebrities and influencers like Kim Kardashian or Elon Musk into tokens, with the value of their respective tokens representing their popularity on the site. Launched in March by Diamondhands, later revealed to be Nader Al-Naji, investors include Andreessen Horowitz and Chamath Palihapitiya’s Social Capital.
Blockchain + Gaming
SpaceY2025 is an NFT play-to-earn game that is premised on colonizing and defending Mars, inspired by Tesla CEO Elon Musk’s mission to the planet. The Blockfish-designed game’s first version was launched in July. Investors include cross-border venture fund Draper Drago
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