Blockchain firms boosted by wave of venture capital funding

Venture capital funding has been pouring into the blockchain industry in 2022 through a flurry of high value deals, fresh data has revealed.

Blockchain companies attracted a staggering $23.8bn of venture capital funding in 2021 and have already raised $5.6bn (£4.2bn) in the first two months of 2022 putting the industry on track for a record year according to Pitchbook data.

High value deals closed so far this year include a $385m capital raise by US crypto mining company Compute North and a deal for $207m closed by Blockdaemon. Crypto exchange giant FTX raised $400m in a January 2022 funding round, making it one of the blockchain sector’s most valuable firms at $32bn.

“Though blockchain technology is far from maturity, broad conceptual and technical underpinnings are taking shape, accelerated via increasing investor participation,” wrote Ryan Vaswani of Pitchbook, noting that dedicated crypto funds have ballooned in size over the past 12 months.

“Such eager participation, in concert with increasing corporate experimentation, suggests that blockchain is finally having its moment,” Vaswani added.

Financial services led the way for investment last year driven by growing interest in the decentralized finance (DeFi) ecosystem, but infrastructure startups focused on Web3 and decentralization are quickly reaching parity the data revealed. An explosion of mainstream interest in NFTs and the metaverse has also helped to legitimise blockchain firms in the eyes of VC investors.

High volumes of deals in the blockchain space are being led by big name investors including Coinbase Ventures and Silicon-Valley investor Andreessen Horowitz. AU21 Capital, NGC Ventures and Digital Currency Group are also some of the most active funds in the space.

Almost 200 blockchain venture capital deals have closed in the first two months of the year raising more than $5.6bn between them. By contrast, 403 deals raised less than $3bn in 2020, signalling that blockchain firms are landing higher value deals.

Read more: Crypto VC boom shows no sign of stopping in 2022