Over $30 billion raised throughout the year, review the 2021 investment and financing landscape in the cryptocurrency sector

Author: Carol, PANews

The blockchain industry in 2021 was thriving. According to CoinMarketCap, the total market capitalization of the digital currency market expanded from $755.74 billion on January 1 to $2,248.67 billion on December 31, achieving an annual increase of 196.27%. With the rising tide, most digital currencies also saw substantial returns.

While the secondary market was overall positive, the primary market was equally flourishing. According to data from PANews' data journalism column PAData, global investment and financing in the blockchain sector continued to maintain rapid growth in 2021, attracting over $30 billion in funding for crypto startups throughout the year.

This article is a review of the investment and financing events disclosed throughout 2021, with the core findings as follows:

(1) A total of 1,205 independent projects disclosed 1,351 investment and financing events throughout the year, presenting an overall "explosion-retraction-re-explosion" "V" shaped process. Among them, the number of disclosed investment and financing events in December reached 153, the highest for the year.

(2) The total amount of financing disclosed throughout the year was $30.51 billion. Overall, the total amount of investment and financing grew over time, peaking in November at approximately $5.098 billion.

(3) Among the financing events, 663 were seed rounds, 168 were Series A, and 145 were strategic investments, together accounting for about 83.56%, while events from other rounds were relatively few. Notably, there were more financing events after Series C in the fields of CeFi and Infrastructure.

(4) DeFi had the most investment and financing events, but the total amount was the lowest, while CeFi had fewer events but the highest total amount. NFTs and Web3, as relatively new fields, disclosed total financing amounts of $3.61 billion and $2.21 billion, respectively, both higher than DeFi.

(5) From the perspective of major sub-sectors, Gaming disclosed a total of 141 investment and financing events, with a cumulative total of $3.528 billion, making it the leader in both metrics among all sub-sectors, undoubtedly the most favored by capital in 2021. Most of these Gaming projects were associated with NFTs, with some linked to Web3.

(6) Among 27 major investment institutions, Coinbase Ventures had the highest number of investments throughout the year, reaching 96, involving 93 independent projects. Following that, Alameda Research, NGC Ventures, and Animoca Brands also had over 78 investments each, involving more than 75 independent projects.

(7) Different institutions showed certain differences in their investment fields. For example, the field with the most investments from Coinbase Ventures was Infrastructure, and other institutions that also focused more on this area included Digital Currency Group, Dragonfly Capital, Kenetic, and Binance Labs.

In contrast, NGC Ventures, Alameda Research, Polychain Capital, Defiance, and Mechanism focused on the DeFi sector. Animoca Brands primarily concentrated on NFTs and Web3.

1. 1,205 projects disclosed 1,351 investment and financing events, with a total amount exceeding $30.5 billion

According to statistics, 1,205 independent projects disclosed their investment and financing situations in 2021. If different rounds of financing events for the same project disclosed within the year are considered as separate events, these projects had a total of 1,351 investment and financing events throughout the year. Among them, the number of disclosed investment and financing events was relatively low in January and February, with only 39 and 58 events, respectively. Subsequently, global blockchain investment and financing experienced a "explosion-retraction-re-explosion" "V" shaped process.

In March, there were a total of 148 investment and financing events in the global blockchain sector, a month-on-month increase of 155.17%. Although investment and financing events declined from April to July, they still remained above 100 events each month. In August, the number of events dropped to 85, reaching a short-term low, and then began to recover month by month. By December, the number of investment and financing events reached 153, the highest for the year.

Out of the 1,351 investment and financing events, 1,206 disclosed the total amount of financing, totaling approximately $30.51 billion. Over time, the total amount of disclosed investment and financing grew, peaking in November at about $5.098 billion. Additionally, the monthly total disclosed in March, July, October, and December was also above $3 billion. In contrast, the months with the lowest total investment and financing amounts were January, February, April, and August, all below $2 billion, especially February, which had only $508 million.

From the perspective of specific projects, the projects with total financing exceeding $1 billion throughout the year included FTX, NYDIG, and Robinhood, with totals of approximately $1.321 billion, $1.3 billion, and $1 billion, respectively.

Additionally, there were 10 projects with total financing exceeding $500 million, including MoonPay, Forte, Fireblocks, Revolut, Celsius Network, Sorare, Digital Currency Group, Genesis Digital Assets, Dapper Labs, and GRIID. Furthermore, there were 49 projects with total financing exceeding $100 million, including popular projects like Circle, Solana, BitDAO, Avalanche Foundation, and Animoca Brands.

Among the 1,351 investment and financing events, 183 did not disclose the financing rounds. Among the remaining 1,168 events, 663 were seed rounds, accounting for 56.76%. Additionally, there were 168 Series A rounds and 145 strategic investments, together accounting for 26.80%. Other rounds of investment and financing events were relatively few, such as 63 Series B (including extended Series B), 19 Series C, 12 Series D (including extended Series D), 4 Series E, and 1 Series H. Overall, the investment and financing in the blockchain sector in 2021 still belonged to the early stage, consistent with the situation in the previous two years.

Considering the fields of the projects, it can be seen that there were more financing events after Series C in the fields of CeFi and Infrastructure, while projects in DeFi, NFTs, and Web3 mostly only underwent seed rounds and Series A financing.

2. DeFi has many events but CeFi has a high total amount; the Gaming sector is highly favored

Which fields are institutions investing in?

The answer to this question has always been regarded as a barometer for industry development. According to statistics, among the 1,351 investment and financing events in 2021, 388 occurred in the DeFi sector, accounting for about 28.72%; additionally, 287 occurred in the Infrastructure sector, and 284 occurred in the NFTs sector, accounting for approximately 21.24% and 21.02%, respectively.

In contrast, the number of investment and financing events in the CeFi and Web3 sectors was relatively low. Therefore, from a numerical perspective, DeFi remains one of the fields most focused on by capital.

However, from the perspective of financing amounts, the situation is different. The total amount of disclosed investment and financing in the CeFi sector was approximately $15.06 billion, the highest among all categories, while the DeFi sector disclosed only $2.09 billion, the lowest among all categories.

In addition, the total amount disclosed in the Infrastructure sector was also high, reaching $7.55 billion. NFTs and Web3, as relatively new fields, also disclosed considerable total financing amounts of approximately $3.61 billion and $2.21 billion, respectively.

From the perspective of major sub-sectors, Gaming is undoubtedly the most favored by capital in 2021.

According to statistics, the Gaming sector disclosed a total of 141 investment and financing events throughout the year, with a cumulative total of $3.528 billion, making it the leader in both metrics among all sub-sectors. Among these Gaming projects, the vast majority were from the NFTs category, accounting for approximately 65.25%, followed by some from the Web3 category, accounting for about 26.95%.

In addition to Gaming, other sub-sectors with a relatively high number of disclosed investment and financing events included Tooling, Trading, and Marketplace, with 68, 52, and 52 events, respectively. Other popular fields, such as Metaverse, disclosed only 33 events, Lending/Borrowing disclosed only 45 events, and Yield disclosed only 23 events, all of which are not many. Fields with even fewer events included Debt, Tax, Investment, Brokerage, and Enterprise, all of which did not exceed 10 events.

Sub-sectors with high total disclosed financing amounts throughout the year also included Exchange, Mining, Custody, and Payment, reaching $3.176 billion, $1.976 billion, $1.686 billion, and $1.632 billion, respectively. Additionally, fields with total financing amounts exceeding $1 billion included Enterprise, Banking, Brokerage, and Layer 1. Conversely, fields with lower disclosed financing amounts included Yield, Debt, Smart contracts, Savings, Tax, and Security, all of which did not exceed $300 million.

3. Eight major institutions made over 50 investments, and 38 projects completed multiple rounds or investments from multiple mainstream institutions

The investment trends of well-known investment institutions often represent market directions.

PAData analyzed the investment overview of 27 major investment institutions in 2021. The statistical results showed that Coinbase Ventures had the highest number of investments throughout the year, reaching 96, involving 93 independent projects. Following that, Alameda Research, NGC Ventures, and Animoca Brands also made a considerable number of investments, reaching 86, 84, and 78, respectively, involving 83, 83, and 75 independent projects.

Even the institution with the fewest investments, ConsenSys Ventures, completed 15 investments throughout the year, involving 14 independent projects. Overall, well-known investment institutions frequently "took action" in 2021, making multiple investments.

From a broad category perspective, the track choices of these well-known investment institutions were consistent with the overall situation, as they widely invested in the DeFi sector and actively invested in NFTs and Infrastructure. However, different institutions still exhibited certain differences.

For example, the field with the most investments from Coinbase Ventures was Infrastructure, with 28 investments, accounting for about 29.17%. Following that were CeFi and DeFi, while investments in NFTs and Web3 were relatively few. Similarly, institutions that also placed more emphasis on investing in the Infrastructure sector included Andreessen Horowitz, Digital Currency Group, Fenbushi Capital, Dragonfly Capital, Kenetic, and Binance Labs, with their investment numbers in this field accounting for a high proportion of their total investments.

NGC Ventures primarily focused on investing in the DeFi sector, with a total of 44 investments, accounting for 52.38%. Other institutions also focusing on DeFi investments included Alameda Research, Polychain Capital, Defiance, Mechanism, and Three Arrows Capital. Additionally, Animoca Brands primarily focused on NFTs and Web3, with a total of 36 and 27 investments, respectively, accounting for approximately 80.77%. Institutions also paying attention to these two emerging fields included Andreessen Horowitz, with 14 and 12 investments, respectively.

From the project perspective, in 2021, there were 38 projects that disclosed investment and financing events involving 5 mainstream investment institutions (counting the same institution participating in different rounds separately). Among them, dYdX received investments from 8 independent mainstream investment institutions within the observation scope, including Andreessen Horowitz, Defiance, Delphi, Hashed, Hashkey, Polychain Capital, QCP, and Three Arrows Capital, with Three Arrows Capital and Polychain Capital participating in different rounds of investment, thus totaling 10 investment institutions.

Additionally, Lithium Finance, Lido, dTrade, SIPHER, Xdefi Wallet, StarkWare, Worldcoin, and Beta Finance also received investments from at least 4 independent mainstream institutions, with some institutions participating in different rounds, resulting in a total of more than 7 disclosed major investment institutions. For example, Alameda Research, GBV, NGC Ventures, and Pantera Capital all participated in different 2 rounds of investment in Lithium Finance; Defiance and Polychain Capital participated in different 2 rounds and 3 rounds of investment in dTrade; Mechanism and Morningstar participated in different 2 rounds of investment in Xdefi Wallet, etc. This situation is not uncommon, indicating that investment institutions maintain sustained interest in quality projects.