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Venture Capital Investment into Digital Assets Accelerates Despite Crypto Bear Market

Venture capital funding in the cryptocurrency and blockchain industry exceeded $17.5 billion in the first half of 2022 and is projected to exceed 2021’s $26.9 billion VC capital inflow by the end of the year despite bearish market trends.

Venture capital firm investments into the cryptocurrency and blockchain startup ecosystem are positioned to break last year’s record, with VC investors capturing equity within the industry amidst a significant market downturn that saw crypto markets reach multi-year lows.

VC Directs Billions Toward Blockchain Industry

Data published by financial data and software company PitchBook reveals venture capital investors have directed $17.5 billion toward the blockchain industry since Q1 2022, with notable investments including the execution of a $65 million series A by Web3 platform unstoppable domains with a $1 billion valuation.

VC investment data reveals that, while crypto market speculators may be pulling back due to ongoing macroeconomic factors such as US Fed interest rate hikes and a 65 percent drop in Bitcoin prices since November 2021, venture capital firms are unfazed and moving in on lower valuations to capture ground within the industry.

Capital flow from the VC ecosystem into blockchain startups has remained centered on the US as a funding hotspot over the last year, with US-based VC firms directing 11.4 billion towards crypto and blockchain startups in the first half of 2022.

Some of the largest venture capital investments into crypto startups and platforms include  $400 million raised by FTX in January, a $400 million round executed by stablecoin issuer Circle, and a $450 million fundraising round launched by blockchain developer Consensys.

Venture Capital Takes Aim at Web3 & Payment-Focused Startups

The first half of 2022 saw the launch of some of the largest VC movements into the blockchain industry, with Andreessen Horowitz raising a $4.5 billion crypto fund in May and blockchain startups StarkWare and Babel Finance securing multi-billion dollar valuations.

Notably, Bitcoin payment-focused startup Lightspark captured $175 in funding after a stealth launch.     The largest single funding round executed by a blockchain industry startup in 2022 was Trade Republic’s $1.2 billion raise and $5.3 billion valuation.


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