Overview of Crypto Venture Capital Fundraising and Investment Data in 2021
Source: Galaxy Digital
Compiled by: Alpha Rabbit
Key Insights
In 2021, venture capital funds invested more in startups building in the crypto and blockchain space than in all previous years combined.
In 2021, venture capital firms invested over $33 billion in cryptocurrency/blockchain startups. Approximately $22 billion (67%) of this investment exceeded $100 million. In 2021, the funding received by crypto/blockchain startups accounted for about 5% of the total venture capital investment across all industries for the year.
In Q4 2021, the valuation in the crypto/blockchain space was 141% higher than in other venture capital sectors, indicating that on one hand, startups in this category found it easier to secure funding, and on the other hand, competition among deals was very intense.
In 2021, nearly 43 venture-backed startups became unicorns. Meanwhile, early-stage funding cases like seed rounds continued to decline, while the number of funding cases after Series A increased, indicating that companies founded during the crypto bear market from 2018 to 2020 are gradually maturing and moving to the next stage.
By category, companies providing trading, investment, exchange, and lending services for crypto investors accounted for over 41% of the total funding, while startups in industries such as NFTs, Web3, DAOs, and the Metaverse received nearly 17% of the funding.
Fundraising for the crypto space was quite active in 2021; among the crypto funds raised in 2020, 62% of GPs continued to raise new funds in 2021.
Higher Total Investment
In Q4 2021, the total venture capital investment in the crypto space exceeded $10.5 billion. For the entire year of 2021, the total venture capital investment in the crypto/blockchain sector reached $33.8 billion, marking a historic high, which accounted for 4.7% of the total venture capital investment across all sectors in 2021. 2021 also saw the highest number of deals, with a total of 2,018 cases, approximately double that of 2020. The previous record was in 2019, with a total of 1,698 transactions.
From the perspective of funding stages In Q4 2021, the amount of Series A funding for crypto startups was the largest, with a significant amount of investment also occurring after Series A.
In Q4 2021, the proportion of funds invested in relatively early-stage companies increased to over 60%.
Deal Data by Stage
The number of deals in 2021 also increased, with a total exceeding 2,000. However, among completed cases, the number of seed rounds and other early-stage deals continued to decline over several months.
Number of Series A Deals
The number of Series A deals reached a recent high. This was mainly due to early companies established during the bear market from 2018 to 2020 entering the Series A funding stage.
Note: This chart is quite important Funding situation of crypto projects segmented by category Among the $33 billion invested by venture capital in crypto startups, the largest portion went to companies providing crypto trading, investment, exchange, and lending services, which collectively received over $13.8 billion (41.83%) in funding. An increasing number of Web3 companies are also gaining attention, including those building tools and infrastructure for NFTs, DAOs, and the Metaverse, among others (17%).
In 2021, there were 69 funding rounds in the crypto space exceeding $100 million. Deals over $100 million accounted for 67% of the total $33 billion invested by venture capital in the crypto space, which is $22 billion.
Crypto Fundraising Situation
In 2021, the crypto industry experienced rapid growth. According to VisionTrack's 2021 data, there were over 500 crypto venture capital firms. In 2021, 49 new funds were raised, with an average fund size of about $300 million, which is double the average fund size in 2020. Among the 49 new funds, 43% were first-time funds, and 41% were new rounds from previous funds.
LPs, fund-of-funds, and others have a demand for allocations to crypto venture capital. Therefore, many GPs raised new funds faster than expected. According to VisionTrack, among the funds raised in 2020, 62% of the fundraisers continued to raise new rounds in 2021, which is a surprising number, as most funds typically have an investment period of 3-5 years.
The following chart shows the fundraising situation of crypto VCs in 2021:
From the perspective of the entire venture capital industry
In 2021, venture capital investment in startups across all industries and stages exceeded $700 billion, with the funding received by crypto startups accounting for 4.7% of all funds, the highest proportion ever.
Valuation The valuations of crypto startups continued to soar in Q4 2021. The median pre-money valuation of crypto startups reached $70 million, while the median pre-money valuation for venture capital targets across all industries in 2021 was $29 million. The median valuation of crypto startups was 141% higher than the $29 million valuation of all startups.
Comparing the venture capital situation in the crypto space with other emerging technologies
Compared to companies in quantum computing, cloud computing, robotics, fintech, and machine learning, both the number of crypto deals and the venture capital amounts increased. In 2021, the number of venture capital deals in the crypto space exceeded 2,000, accounting for 12.41% of the total deals in quantum computing, cloud computing, robotics, fintech, machine learning, and crypto.
Venture Capital in the Crypto Space vs. Digital Asset Market
Historically, venture capital activity in the crypto space reflects the value of the crypto asset market. In 2021, the level of venture capital activity was highly correlated with the performance of the digital asset market. When cryptocurrencies appreciated, the heat of crypto venture capital also increased.