Venture Capital Firms Have Invested $17.5B in Crypto Startups This Year

Considering the potential that crypto startups have and the significant returns that could be derived from investing in them, venture capitalists have continued to invest billions of dollars into small crypto firms.

VC Firms Invest Heavily in Crypto Despite Market Downturn

Venture capitalists are individuals and/or firms that invest funds in young crypto firms in exchange for a potential return on investment (ROI) when the startups become successful. 

Data from PitchBook shows that this year alone, a total of $17.5 billion has been poured into crypto and blockchain startups. Among those who benefitted from the capital is the US arm of the FTX crypto exchange. The company received $400 million in January.

Blockchain infrastructure platform, Consensys also received $450 million in March through series-D funding. Another $400 million was likewise invested into USDC stablecoin issuer, Circle, in April.

Venture capitalists in Europe also invested a total of $2.2 billion this year into other young crypto companies. 

Venture capitalists’ demeanor toward startups in the crypto industry seems not to have been affected by the recent market downturn. 

“The current market condition, I don’t think they faze investors. The capital available is massive,” said Roderik van der Graf, founder of Hong Kong investment firm Lemniscap.

In fact, the current rate at which funds are pouring into crypto startups puts 2022 on the road to beating last year’s record. In 2021, crypto startups received a total sum of $30 billion from venture capitalists, the highest yearly investment so far.

Notably, just like this year, the market sell-off that occurred in 2021 had no negative effect on investments for startups during the period.

Crypto Startups Attract More Investors

Notably, young blockchain firms continue to serve as a gateway for investors to enter the crypto industry.

In January, cryptocurrency exchange platform FTX rolled out a $2 billion venture fund that will be used to sponsor crypto startups.

In March, American investment startup Bain Capital Ventures launched a $560 million venture fund, part of which was dedicated to 30 companies, crypto startups included.

Fasanara Capital, a UK-based asset management firm, also raised a new $350 million venture fund this year that is to be poured into fintech and crypto startups.