The past year has been an impressive year for blockchain startups, as research from CB Insights found that venture capital financing reached new heights every quarter of 2021.. Global blockchain startups managed to show a growth of 713% last year compared to $ 3.1 billion in 2020.
The report also indicated that the United States led the way in contract financing in the fourth quarter of last year, receiving $ 6.26 billion from 157 contracts. The newspaper notes that global growth has been driven by increased demand from consumers and companies for crypto-related products and services.
Venture capital with a focus on crypto adoption
Chris Bendtsen, chief analyst at CB Insights, told Cointelegraph that the CB Insights report summarizes data on private marketing funding from more than 3,000 blockchain and cryptocurrency companies that the company regularly monitors. Bendtsen also emphasized that although the title of the report refers to blockchain, it is an umbrella category that includes cryptocurrencies, immutable tokens (NFT), enterprise blockchain and decentralized finance (DeFi). Bendtsen noted that most of the venture capital financing mentioned in the report is for cryptocurrency-focused startups. The report said:
“More than $ 100 million in mega-rounds (worth over $ 100 million) has been the driving force behind a record year of blockchain financing. The 59 mega-rounds in 2021 accounted for only 5% of all transactions, but 60% of total financing. The largest transactions were in cryptocurrencies, brokerage services , NFTs, games and payments. ”
According to the report, $ 1 out of every $ 4 in financing went to cryptocurrency exchanges and brokers, which is also equivalent to a quarter of all global blockchain financing in 2021. ranked second in stockbroking and stock trading in the fourth quarter of 2021 – exchange rate financing in specific countries also grew .
For example, CoinSwitch Kuber, one of India’s largest cryptocurrency exchanges, ranked fourth in brokerage and parity trading in the fourth quarter of 2021, raising over $ 260 million in its latest Series C financing round. Bendtsen said: “Based on these findings, it becomes clear that we are witnessing the globalization of cryptocurrencies as more and more country-specific exchanges make impressive rounds.”
Bendtsen also noted that global venture capital financing for custodians and portfolio service providers amounted to $ 6.3 billion last year. He noted that “in early 2021, most of the funding went to consumer-run exchanges, but there was a shift later in the year with significant rounds of funding going to cryptocurrencies and managers.”
For example, the New York Digital Investment Group (NYDIG) ranked the best stock trading in the fourth quarter of 2021 in the Depot and Portfolio Providers category. In December 2021, the financial institution Bitcoin (BTC) secured a $ 1 billion equity investment led by WestCap Group. Fireblocks, a digital asset custody platform, is directly rated by NYDIG with an increase of $ 550 million from Sequoia Capital.
Michael Schaulof, CEO of Fireblocks, told Cointelegraph that he believes investors pay more attention to custodians and portfolios because it has been the biggest obstacle to getting into institutional participation. “Having a direct incubation solution and technologies that can come in and work for the cryptocurrency markets is a game changer for both companies and individuals,” he said.
“Our investors see us as the select few in the cryptocurrency industry. This includes everything from custody wallets and settlement networks, to integration with Chainalysis and Elliptic, and access to stakeholders.”
Regarding the company’s latest round of financing, Shaulov said that Fireblocks plans to expand its offering to include protection of large transactions around DeFi and NFT. This is important, especially now that fraud and deception are on the rise in the Defi and NFT sectors.
Although criminal activity in the NFT area is flourishing, a CB Insights report found that funding for NFT startups has grown 130 times. In 2020, NFT startups raised $ 37 million in venture capital funding, which reached $ 4.8 billion in 2021. The report highlights that “games, marketplaces and infrastructure are the top three categories in NFT that cause funding frenzy.”
Animoca Brands, which was ranked number 1 among investors by number of companies in the fourth quarter of 2021 according to CB Insights, made at least 49 investments in blockchain projects last year.