The first quarter of 2022 saw unprecedented growth in terms of venture capital (VC) activity across different blockchain sectors. In 2021, venture capital firms invested more than $30 billion in infrastructure, non-fungible tokens (NFTs), decentralized finance (DeFi), centralized finance (CeFi), and Web3. That set the bar very high if 2022 were to top it. In the first quarter of 2022, venture capital inflows exceeded $14.6 billion, or about 48% of all venture capital investment last year.
In the first three months, more than 500 individual deals were closed in the five main sectors mentioned in 2022. Cointelegraph Research studied and analyzed its database of deals, mergers and acquisitions (M&A), investors and cryptocurrency companies to compile a report of 12 pages on the main activities of VC in the crypto sphere.
Leaving 2021 behind
Anyone interested in cryptocurrencies, blockchain, and the future of this industry should pay close attention to the content of this report. By studying what VCs are doing and learning about the players that are investing in projects and what platforms are being invested in, people can help stay on top of things and make informed decisions.
It takes more than great technology to get people to use a product. History is littered with great products that simply did not have the right mix of marketing, management, or capital to successfully bring a product to market.
Venture capital companies try to solve these problems by investing more than just the capital needed to get a project off the ground, they also provide a network of contacts who can bring solutions to the right mix of marketing and strategic management.
Download the full report here, with graphs and infographics.
Cointelegraph Research Terminal, in conjunction with Keychain Ventures, brings you a report that dives into the first three months of 2022. Cointelegraph Research’s 12-page report looks at the most active investors, mergers and acquisitions, largest deals, and largest investors. new funds in the first quarter of 2022.
Record in number and value of operations
The first quarter of 2022 saw an unprecedented amount of capital inflows into the blockchain industry. Since the start of 2021, each quarter has continually increased the total capital invested in this space, culminating in the first quarter of 2022 ushering in more than $14.6 billion in venture capital investment. The median US dollar value of each deal has also increased and now stands at around $32.3 million over the past three months.
The number of individual operations is also increasing and has broken the previous record, reaching more than 500 in the first quarter of 2022. The surge is likely to continue the upward trend as the space is attracting new funding from Bain Capital and Sequoia Capital, venture capital firms that have long been in traditional markets. The industry has also seen consolidation through acquisitions by long-standing cryptocurrency players such as OpenSea, Coinbase, Fireblocks, FTX, and Blockchain.com. In all cases, these strategic purchases broaden the scope of each company’s core business offering.
Startup funds such as Bain Capital and Haun Ventures are primarily focused on Web3 projects, which, interestingly, were the largest shareholder in Q1 2022, overtaking the usual leader DeFi. The CeFi sector remains the least active in terms of number of deals and capital inflows of all sectors.
The most active investors are more evenly spreading their investments across two or three different sectors, which has changed the patterns seen in 2021. This potentially shows a maturation of the venture capital strategy, but even so, these equitable allocations are in DeFi, Web3, NFTs and infrastructure, with much less being invested in CeFi.
The seed rounds are active, but the expansion rounds are the ones that generate the most interest in the capital
Pre-seed and seed rounds had the most venture capital activity with 288 individual deals worth more than $2.1 billion. Watching these rounds unfold is promising for the entire industry as each startup brings new applications for blockchain and new competition for previously formed organizations.
The expansion rounds were not as active, but registered more than 2.5 times the capital inflows, with almost USD 5,800 million. These rounds help encapsulate the overall growth potential and scope of current blockchain projects, which most venture capital firms are willing to invest money in, as they are less risky than earlier stage investments such as the series A rounds.
Blockchain needs the right people
One issue that is intensifying with all this capital investment is the need for people and talent in the blockchain space. As more companies have plans to expand, create new products and diversify their organizations, employees with the right skills are getting harder to find. Cointelegraph Research recently interviewed Keychain Ventures and Dragonfly Capital. In that conversation, many topics were discussed, including the human capital bottleneck, which will only get more tense as more is invested in the sector.
Quarterly Venture Capital Reports from Cointelegraph Research Terminal and Keychain Ventures
The report comes from the extensive Cointelegraph Research Terminals database along with analysis by Michael Tabone, an economist at Cointelegraph Research. Michael has extensive experience in economics, business, finance, cryptocurrencies, blockchain technology, and working with emerging technologies. In addition to working for Cointelegraph Research, Michael is a Ph.D. candidate working on his dissertation, which focuses on DAO theory and application.
Keychain Ventures is a cryptocurrency investment firm that is dedicated to investing different funds in the blockchain space. Keychain Ventures, along with Cointelegraph Research, will feature quarterly interviews with venture capital firms as well as cryptocurrency and blockchain projects that have recently gone through a funding round. These interviews will open up different views of the investment practices of all parties.
This article is for informational purposes only and does not represent investment advice, investment analysis, or an invitation to buy or sell financial instruments. Specifically, the document is not a substitute for individual investment or other advice.
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