In recent years, crypto and web3-related startups have seen a surge in interest and investment from traditional VCs. Some have even gone as far as to set up dedicated crypto funds, while others are investing sizeable portions of their existing portfolios into the space. But what’s behind this sudden influx of interest? And more importantly, is it warranted?
The first thing to understand is that VCs are primarily looking to invest in companies with the potential for high growth. Given the current development stage of the crypto industry, it’s not hard to see why VCs see it as a ripe opportunity for investment. In particular, they are drawn to the following aspects:
The size of the opportunity: Cryptoassets and web3 applications have the potential to redefine how we interact with the internet and conduct transactions online. This presents a huge opportunity for businesses and investors alike.
The early mover advantage: While the industry is still in its infancy, there are already a number of established players with strong track records. These companies are well-positioned to take advantage of the growth in the space and reap substantial rewards.
The talent pool: One of the key factors driving VC interest in web3 is the quality of the teams behind these projects. Many of them come from top technology companies or have otherwise demonstrated their technical expertise. This gives them a significant advantage over traditional businesses in terms of building out their products and go-to-market strategies.
What are VCs in crypto?
Venture capital funds are investment vehicles that are typically used to invest in early-stage companies. In the crypto space, venture capital funds are often used to invest in blockchain and crypto startups. Bitcoin and Ethereum are two of the most popular crypto assets, and many VCs have invested in these projects. However, there are also a number of other crypto assets that have been backed by VCs, such as Litecoin, Cardano, and Zcash. These VC-backed crypto projects have the potential to provide investors with high returns. However, they also carry a higher risk than more established crypto assets.
How much VC money is in crypto?
The crypto industry has seen a lot of venture capital investment in recent years. While the exact amount of money flowing into crypto projects is difficult to track, some estimates put the figure at around $4 billion in 2019. This is a significant increase from previous years, and it shows that VCs are becoming more interested in crypto assets. The most popular crypto asset by far is Bitcoin, which has attracted nearly $2 billion in VC funding since 2012. Ethereum, the second-largest crypto asset, has also been attracting a lot of interest from VCs, with over $1 billion invested since 2014. These numbers show that crypto assets are gaining mainstream attention from the investment community. With more and more VC money flowing into crypto, we can expect to see continued growth in the industry. Update: Almost $30 billion of VC money poured into Crypto in 2021. So 7.5x more than in 2019.
How to start a crypto venture capital firm?
Starting a crypto venture capital firm is not as hard as it may sound. The first step is to understand the basics of crypto and Bitcoin. Crypto is a digital or virtual currency that uses cryptography for security. Bitcoin is a decentralized digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries. Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of fraud or third-party interference.
Once you have a firm understanding of crypto and the different types of currencies available, you can start to look into setting up your firm. There are numerous ways to set up a crypto venture capital firm, but one of the most important things to consider is where you will get your funding from. There are many ways to fund a crypto venture capital firm, but one of the most common is through initial coin offerings (ICOs). ICOs are a type of crowdfunding, where companies raising money for their projects sell crypto tokens in exchange for investment capital.
Lastly, it is important to have a solid business plan in place before starting your crypto venture capital firm. This business plan should include your goals and objectives, as well as how you plan on achieving them. It is also important to have a clear understanding of the risks involved in investing in crypto projects. With a solid business plan and a clear understanding of the risks involved, you can be well on your way to starting your own crypto venture capital firm.
It’s clear that venture capitalists see a lot of potential in web3 and related technologies. While there are definitely risks involved, they believe that the rewards outweigh those risks. For crypto investors, this presents an interesting opportunity to get in on the ground floor of potentially groundbreaking projects. However, it’s important to do your own research before making any investment decisions.
List of the 20 biggest Crypto VCs
- 3AC – Three Arrows Capital (Liquidation)
- a16z – Andreessen Horowitz
- Alameda Research
- Jump Crypto
- Digital Currency Group
- French Hunters Ventures
- Coinbase Ventures
- Binance Labs
- Paradigm
- Multicoin
- Pantera
- Draper VC
- Polychain
- Framework Ventures
- PetRock Capital
- TRGC
- Fabric Ventures
- Animoca Brands
- Genblock Capital
- Metapurse
