Disruptive innovations often lead to revolutionary outcomes, and the evolution of digital assets demonstrates a similar potential for the global financial industry. As numerous blockchains propose their ideal recipe for balancing decentralization, speed, and security, a plethora of decentralized applications with attractive value propositions is being developed on top of them. The blockchain industry has shifted gears in the last three years.The industry is evolving at an accelerating pace, and a probability of a forthcoming technological revolution has infused curiosity among tech enthusiasts and investors around the globe.The exuberance of digital assets, especially in the bull markets, has attracted the attention of venture capitalists (VCs) since it offers potential exposure to asymmetric investment opportunities.
Although cryptocurrencies have garnered noticeable adoption in recent years, the digital asset industry is still embryonic, as investments in crypto and traditional markets differ by orders of magnitude. A mere 8% of the total amount invested by venture capitalists in 2022 corresponds to the digital asset sector.
The nascent digital asset industry is just a blip on the radar for firms focused on traditional market investment coverage and analysis, as historically, the digital asset industry has contributed to less than 10% of yearly investments.
The digital asset landscape tends to be plastered with an abundance of speculative data from unreliable sources, which makes it arduous to separate the signal from the noise.The crypto industry serves unique challenges like the identification of multichain protocols, interpretation and categorization of on-chain investments, exclusion of 'web3' companies in which blockchain only contributes as a buzzword, etc.Tackling these issues requires a more nuanced crypto-native understanding. As a result, the digital asset sector has never gotten the comprehensive, fact-based, in-depth analysis of the venture funding landscape it deserves.
This report endeavors to change that.
In an attempt to analyze the sector from the perspective of venture capital investments, we followed the money injected into blockchain companies and protocols.This report synthesizes historical funding data and offers a thorough commentary on the evolution of investment theses in the blockchain industry.The report also talks about the effect of marquee events on the volatility in market price action and variations in funding trends.
This report is not financial advice. It only offers a comprehensive congregation of available data followed by observations that may help guide readers through the complex industry of crypto private funding.
The report examines funding activity until Q3 2022.
The digital asset sector has been a wildly volatile landscape. Over the past six years, market capitalization has increased more than 20 times and fallen by more than 50% from its all-time highs (ATH). The sector has raised 6,380 venture funding deals in this timeframe, corresponding to $73.4 billion.
Amount raised for 1,557 out of the recorded 6,380 deals were unidentified.These deals were not considered while calculating the average and median for respective deal types. A total of 2668 Seed and Pre-Series A deals were recorded, whereas only 86 Later stage deals were identified.The average and median values for Later Stage deals were the highest, corresponding to $149.2 million and $105 million, respectively.