VCs Invested $30 Billion in Crypto Firms Last Year: More Than 400% Increase Compared to 2020

It is no news that an increasing number of corporate investors are seeking to gain more exposure to cryptocurrencies, given that the asset class has grown tremendously from its nascent state into a popular financial instrument.

VC Investments Surge 450%

With corporate investors seeing the opportunities associated with cryptocurrencies, a recent report published in CryptoQuant suggests that such businesses saw an inflow of more venture capital (VC) funding in 2021 compared to previous years.

Crypto Investments From VCs. Source: CryptoQuant
Crypto Investments From VCs. Source: CryptoQuant

In 2020, crypto companies saw a handful of VC investments, amounting to only $5.5 billion. However, the figure surged by 450% in 2021, as about $30 billion was poured into the sector by venture capitalists.

Per the report, the $30 billion investments from VCs last year smashed the all-time highs (ATHs) recorded in all previous years since the inception of the asset class.

Bitcoin ETF Approval Prompts VC Investments

CryptoQuant noted that a majority of the funding came in October after the United States Securities and Exchange Commission (SEC) approved the first bitcoin futures exchange-traded fund (ETF).

Last year, several crypto-related companies raised over $100 million from VCs, including the developers of the Axie Infinity blockchain game, Sky Mavis.

NYDIG tops the list of crypto companies that raised substantial amounts of money from VCs, with its $1 billion equity funding round led by Westcap in December. It increased the company’s valuation to a whopping $7 billion.

In November last year, popular cryptocurrency lending platform Celsius Network increased its $400 million Series B funding round recorded in October to $750 million after the event was oversubscribed.

a16z Launches $2.2B Crypto Fund

While equity firm WestCap led the NYDIG and Celsius Network funding rounds, the role played by other VC firms in cryptocurrency investments last year was also significant.

American venture capitalist Andreessen Horowitz participated in different funding rounds ranging from cryptocurrencies to Web3 sectors. This became possible after announcing the launch of a $2.2 billion fund exclusively focused on digital assets.

Coinbase Ventures, Binance Labs, and Galaxy Digital Holdings, among others, also joined several crypto-related investment rounds.

A majority of the funding was used to enhance the operations of cryptocurrency companies in terms of employee recruitment, the launch of new products and services, and obtaining the necessary regulatory approval.