VC Funds pile into crypto with massive bets on NFTs
VC firms continue to flood the crypto and NFT space with more capital than ever.money. What’s accounting for this growing interest?
This year saw an accelerated interest in crypto as VC firms look into gaining exposure to the market. These firms have embraced the market despite regulatory uncertainties. A number of sectors in this space flourished during this time. NFTs, for the most part, were one of them.
Last week Sports NFT projects raised $930 million
Tokenized sport collectibles projects have raised almost $1B in funding within a week. On Sept. 22 Dapper Labs- the firm behind the Flow blockchain & the popular tokenized basketball, NBA TopShot announced a further $250M in a funding round.
Meanwhile, French-based NFT soccer trading card game developer Sorare raised $680 million in Series B funding led by Japanese fintech giant Softbank. The funding round raised the valuation of the firm to $4.3B.
The combined funding for the two firms tally's at $930M. This hints towards a growth in the sports token sector at the time when some people are calling the wider non fungible market deadwith falling sales volume.
Global VC money is flowing into blockchain startups
The huge sums of money flowing into firms like Dapper Labs & Sorare highlight how investors are chasing the next big thing in crypto. Crypto and blockchain start-ups have received about $19B in venture funding so far this year, almost triple the $6.4B raised by the sector in 2020.
NFTs are gaining massive traction by VCs
Prices of NFTs spiked earlier this year, with sales reaching a record $2.5B in the first half of 2021. High-profile transactions include a record $69M artwork sold by digital artist Beeple at a Christie’s auction & the $2.9M sale of the first-ever tweet by Twitter CEO Jack Dorsey.
Some of the notable raises in the crypto market in 2021
VC investment in the crypto and blockchain space was "very strong" in 2021, with several companies raising multiple $100M funding rounds. The notable ones highlighted were FTX ($900M), CoinswitchKuber ($500M), Circle ($440M), BlockFi ($350M), Solana ($314M), Fireblock ($310M) & Blockchain.com ($300M).
Demand for cryptocurrencies, from both consumers and institutions, is driving big deals for companies focused on exchanges, enterprise applications as well as crypto wallets and custody services.
Why are VCs are bullish on blockchain ?
With blockchain touted as having similar global business process disruption capabilities, several notable participants in the mainstream arena appear keen to interact with the emerging technology.
The tokenomics associated with blockchain startups also offers early backers the opportunity to acquire cryptocurrencies that could appreciate in value within a short period. Even with vesting schedules that mandate a significant lock-up of these tokens for VC funds, the gains often outsize their initial equity investment.
How is this good for Crypto space?
The scale of the investment funds flowing into the blockchain space also serves as a counterargument to criticisms against the value proposition of the emerging technology.
With crypto and blockchain often drawing negative attention from policymakers, these multi-million investments could be vital in promoting the industry.
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