Due to the bear run that the cryptocurrency space has seen throughout the year, recent data from Dove Metrics shows that not only are retailers losing money, but that the companies of venture capitalists who have invested in the space are also suffering from the devastating effect of recent bearish sentiments. seen in the market.
According to new data published by Dove Metrics, total venture capital investment in crypto has fallen 38.2% in the past month, from $6.8 billion in April to $4.7 billion. in May. However, these funds have gained 97.8% since last year. This short-term decline in investments can be correlated to the recent market correction, which caused Bitcoin (BTC) and other major cryptocurrencies to lose 50% or more of their value.
Investment breakdown data showed that infrastructure companies received 21% of the pie, while decentralized finance (DeFi) startups accounted for 14%. Centralized Funding (CeFi) and Non-Fungible Token (NFT) projects each accounted for 13%.
What you should know
- The structure of how these VCs allocated their funds shows that VC funds could play it safe by investing in core technologies that actually bring innovation to the crypto space, instead of larger projects. risky.
- Examples of this investment trend include Xendit, a payment gateway solution that focuses on Southeast Asia, and Lithosphere, a next-generation platform for cross-chain decentralized applications, raising $700 million combined.
- The largest allocation in May was led by Sam Bankman-Fried, founder of popular crypto exchange FTX, who invested $650 million in popular brokerage platform Robinhood, securing 7.6% of the company’s shares.
- Other prominent investments include popular analytics firm Chainalysis and KuCoin, one of the largest crypto exchanges, which has raised over $150 million each.
- The data also shows that the United States is the top source of venture capital investment, followed by Singapore and Hong Kong, a statistic that matches the global trend for venture capital.
- Some of the biggest names in venture capital include Andressen Horowitz, with $4.5 billion raised for Web3 projects, bringing his total crypto investment allocation to $7.6 billion. The company is known for supporting several successful projects in the past, such as Coinbase or Solana (SOL).
- Another big name is NGC Ventures, a Singapore-based company that recently raised $100 million, targeting “high potential projects” in the Web3 space. Some of his previous successful investments include Algorand (ALGO) and Oasis (ROSE).
Despite the current bear market in crypto, venture capital appears to be more active than ever, with JPMorgan stating that the recent collapse of the Terra ecosystem has not affected VC. This shows an underlying confidence in the evolution of crypto and blockchain technologies for the long term, with innovative technologies like Web3 and DeFi leading the way.