In 2021, cryptocurrency attracts more money than all prior years combined. With the popularity of digital assets and related initiatives rising, and many of them skyrocketing in price, various experimental enterprises are finding funding.
Do you need any more evidence that 2016 was the year when digital assets became mainstream? Consider the fact that venture capital investors have put about $30 billion into cryptocurrency, more than in any prior year for the barely a decade-old technology combined.
According to transaction statistics gathered by PitchBook Data Inc., this is nearly quadruple the previous high of about $8 billion in 2018 or the year following Bitcoin’s more than 1,300 percent breakthrough gain.
“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 established businesses like Coinbase Ventures, Digital Currency Group, and Polychain Capital gamble on the next big crypto thing, all forms of experimental ventures — a social networking app that turns celebrities into tokens, a play-to-earn non-fungible token game inspired by chess — have sprouted up.
“Investors are funding anything and everything,” PitchBook analyst Rob Le said.
According to Bogart, the rapid growth of what was once deemed fringe sectors like NFTs showed investors what they were missing out on, saying that the once obscure online non-fungible token marketplace OpenSea is now attracting comparisons to e-commerce site Etsy.
The $30 billion figure includes funding rounds from revenue-generating financial technology businesses like Robinhood Markets Inc. and Revolut Ltd., which dabble in crypto. However, according to PitchBook data, US venture capital transactions this year totalled $7.2 billion, which is four times the previous high set in 2018. In July, crypto derivatives exchange FTX secured a $1 billion Series B investment round, bringing its worth to $18 billion. Custodian New York Digital Investment Group raised $1 billion in mid-December, valuing the company at more than $7 billion.
In November, Forte, a provider of blockchain integration solutions for game companies, announced the completion of a $725 million funding round. In March, Dapper Labs, the NFT platform behind CryptoKitties, secured $350 million from investors, including basketball great Michael Jordan, bringing the company’s valuation to $2.5 billion.
MoonPay, a cryptocurrency payments infrastructure company, raised $555 million in late November, bringing its valuation to $3.4 billion. In October, Sky Mavis, the creator of Axie Infinity, raised more than $150 million for the crypto-based online game at a $3 billion valuation.