Venture capital funds have been investing in blockchain for the past eight years. But it is only in the recent past that the industry has started to mature. More than 300 venture capital (VC) businesses have now made two or more investments in blockchain companies. With that in mind, this article will examine the development of VC in the industry and some of the leading players.
Maturation of venture capital and blockchain
Some VCs, like Node Capital, made their first investments in blockchain in 2011. For the most part, however, things were silent until 2013, when two dozen venture capital funds invested in blockchain startups. Some of the early funding rounds of blockchain firms, such as investments in Ripple and Coinbase, have paid off generously.
Investment has been increasing sharply
Not only has the number of venture deals been rising, but so has their size. Robinhood, a stock and crypto trading platform, raised $363 million in a single series D round in May 2018. Compare that to the $150 million it raised in 2015.
Likewise, in 2012 Ripple was among the first crypto firms to receive venture funding. Ripple raised a total of just $3.1 million in its first three funding rounds. That is less than 1% of what Robinhood raised in a single round in 2018.
While there are over 300 venture capital funds actively investing in blockchain, there are dozens that play an outsized role. For example, in 2017, the venture funds in the space spent almost half a billion dollars in the blockchain.
The top venture capital firms investing in blockchain
There are two main types of venture investors in blockchain and crypto companies:
Traditional venture capital funds
The first type comprises of traditional venture funds, many specializing in tech startups that have incorporated a handful of blockchain firms to their portfolios. Some examples include multi-billion dollar venture funds like Sequoia Capital and Andreessen Horowitz.
Sequoia has heavily invested indirectly through investments in crypto hedge funds like Polychain Capital and Metastable Capital. Andreessen Horowitz made early investments in Ripple and Coinbase in 2013 and has continued to invest in more than a dozen other blockchain firms.
Crypto-based venture funds
The other common venture funds are those focussed exclusively on crypto and blockchain investments. These funds invest only in blockchain and cryptocurrency companies. And they do a lot of it. For instance, the Digital Currency Group has made almost 60, mostly seed-stage investments in blockchain companies since they launched in 2013.
Examples of the most influential investors in blockchain
The Pantera Group invests exclusively in blockchain companies. The firm bills itself as an investment and hedge fund company, but most of its investment has been made by offering venture-style seed funding to blockchain startups. Pantera was among the first investors of Ripple, and the company has since made more than 30 venture investments in the space.
As their name suggests, they are another venture fund exclusively investing in blockchain-based businesses. Blockchain Capital started investing in the space in late 2013 and has since invested in almost 50 blockchain companies.
Node Capital is a bit unique among the funds we have discussed above. For one, they are the first venture fund on the list based outside the US. Headquartered in Beijing, Germany, Node Capital, has put much of its investment in firms in Asia like Trip.io and Houbi. The second feature that differentiates Node from other funds in our list is their tendency to invest in ICOs rather than through seed or early-stage funding.
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These are some of the most notable venture capital funds involved in the blockchain space. Though they employ different strategies, operating procedures, and setups, they all play important roles in funding the development of blockchain infrastructure worldwide.