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  • Writer's pictureTodd Bertsch

Crypto's Most Active VCs

In the age of digitalization, cryptocurrency is growing momentously since its inception back in 2009. Its rise from ashes to trillions of dollars in less than a decade is a clear example of changing financial markets trends. According to CoinGecko, the market of cryptocurrency surpassed $3.3 trillion from $ 670 billion in 2021. It was a surprising rise by around 500 percent in less than a year partly due to investment from large firms. Even crackdown on cryptocurrencies in China hasn’t been able to halt the rise in market cap.

Venture capitalists took advantage of the new investment opportunities and invested more than $30 billion in the cryptocurrency market in 2021 which is more than the accumulative investments of the last decade. The major portion of investment around $7.2 billion has been ventured by US based investors. Crypto exchanges, crypto-enabled gaming and startups were the key areas that gained the main chunk of investment. Besides this year, the second biggest venture capital investments were made in 2018 when more than $8 billion were invested in cryptocurrencies.

Many of the venture capital investors were already in the cryptocurrency market. In the year 2021, one of the largest venture capital investments was made in May. Billionaires Peter Thiel, Louis Bacon and Alan Howard backed blockchain software company namely poured $10,000 million into Bullish Global. Bullish Global also succeeded in attracting $300 million of another investment in the same month.

The growing size of crypto compelled Time magazine to consider the importance of the crypto industry. Thus, it listed two crypto giants in its Top Most Influential Companies List in 2021. Digital Currency Group is one of them.

New York based Digital Currency Group remained the most active venture capital investor in cryptocurrency industry in the previous year. Digital Currency Group has invested in more than 255 digital currencies related companies with the aim to build a better and diversified financial system. It is the parent organization of various crypto companies such as Genesis, Foundry, Lune, TradeBlock, CoinDesk, and Grayscale Investments. Grayscale is currently managing more than $45.5 billion of crypto assets. It was the first crypto backed company that registered itself with Securities and Exchange Commission as Trust in 2020.

Besides Digital Currency Group, NGC Ventures is one of the leading investment firms in cryptocurrency industry. The Singapore based company was established in 2017 with the aim to invest in financial market and crypto industry globally. So far, it has supported innumerable projects in the field of De-Fi, gaming, decentralized finance and computing. Some of the major projects include Algorand, Terra, Parami Protocol, ReSource Finance, Polkadot and Avalanche.

Paradigm has also pledged $2.5 billion venture fund for investment in cryptocurrency. The firm was established by Matt Huang and Fred Ehrsam back in 2018. So far, it is the largest investment in the crypto industry by a single firm. Some of its major investments include Coinbase, Maker, BlockFi, FTX, and Uniswap. The firm’s co-founders pen down the importance of cryptocurrency in the new horizon, saying that:

“This new fund and its size are reflective of crypto being the most exciting frontier in technology.”

Another dominant venture capital investor in cryptocurrency industry is “Coinbase Ventures”. Coinbase was founded in 2012 and established a platform for users to purchase and sell cryptocurrency. In the year 2021, Crunchbase data revealed that coinbase has made more than 100 investment deals valued at $3.7 billion.

As the crypto markets become more streamlined, Coinbase went into the stock market with the value of $86 billion in April 2021. The company has also acquired 20 companies and the majority of them are based in North America, Asia and Europe.

US venture capital investors not only provided a major chunk of funds for investments in the cryptocurrency industry but also facilitated streamlining the industry in long run. Pantera Capital is one of the prime and pioneer venture capital investors based in California that has contributions to the crypto industry. It had raised its first cryptocurrency fund when the value of Bitcoin was just at $65 in 2013. The firm didn’t look back then and made more than 130 deals so far with investment in 80 blockchain companies. Recently, Pantera has raised $369 million and $600 million in its deals. The company has $6.4 billion assets under management.

In addition to Pantera Capital, Plug and Play Tech is also based in California. Plug and Play Tech is an accelerator company that invests in innumerable organizations ranging from crypto and blockchain to healthcare and retail, and from supply chain management to insurtech. In crypto industry, Plug and Play is an important venture capital investor and is one of the largest startup accelerators. In 2021, it has invested in more than 150 deals. Its recent investments include Wheel the World and Jerry.

Above all, the year 2021 was the biggest ever year for the cryptocurrency industry and it would not be wrong if we call it “the year of cryptocurrency”. The industry surpassed the market worth of $3 trillion and the same momentum was found in venture capital investments. As the market is continuously expanding in all fields, so are the opportunities and investments.

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