Venture capitalists flock to crypto startups, increase investments in 2021

Venture capitalists flock to crypto startups, increase investments in 2021

As a spillover from multiple crypto investments from institutional players like MicroStrategy last year, VC funds appear to want more from the crypto action.

Venture capital funding has ramped up investment in crypto and blockchain startups in 2021 in a bid to tap from the exponential growth potential. Data shows that crypto startups have received more funding in the first quarter of 2021 than the whole of 2020.

According to a Bloomberg report, citing data from business analytics firm CB Insights, 129 crypto businesses welcomed a total of $2.6 billion in funding in the first quarter of 2021. Comparatively, crypto and blockchain firms received a total of $2.3 billion in 341 deals in the whole of 2020.

Despite the impressive numbers this year, 2018 remains a record year in terms of the funding received by crypto-based startups. In 2018, the sector attracted $3.3 billion in funding. That being said, the year is still fresh and with the current bullish trend, it is possible that VC funding appetite for blockchain companies may push the numbers to new highs.

CB Insights asserts that the increase in funding this year was largely driven by three companies – American crypto lending startup BlockFi, Canadian blockchain game maker Dapper Labs, and UK-based crypto wallet provider In total, all three companies received nearly $1.1 billion in funding this year.

While BlockFi completed its $350-million funding round in March, raised $300 million in the same month following an earlier $120 million funding in February. Meanwhile, Dapper Labs, the brain behind the popular Ethereum-based game CryptoKitties and NFT marketplace NBA Top Shot, received $305 million from VCs in Q1 2021.

Apart from the growth in venture capital funding, the crypto industry has witnessed several mergers and consolidations this year. Henri Arslanian, the global crypto leader at PricewaterhouseCoopers, opined that 2021 figures are on track to surpass the mergers and acquisitions recorded in the previous year.

Read more