Crypto VC boom shows no sign of stopping in 2022
In 2012 Ophelia Brown, the founder of London-based VC fund Blossom Capital, bought her very first bitcoin. Fast forward by almost a decade, and her company has launched a $432m (£319m) fund, dedicated to tech and crypto investment.
“My personal journey started with buying my first Bitcoin in 2012,” said Brown, in comments to Morning Wire.
“I think people are now realising that crypto is not just a niche product for a very small group of people, but there are actually use cases for a much broader, global audience,” she continued.
Far from being alone in her attitude to crypto, Brown is among a growing class of VC investors who are sold on the potential of crypto assets.
Last year saw an explosion in crypto VC investment, with PitchBook data revealing $31.6bn was poured into projects in 2021, more than the 10 previous years combined. The momentum shows no sign of stopping in 2022, with a number of high value new funds launched so far this year.
Some of the largest funds have come from established players within the crypto space. US based investment fund Andreessen Horowitz has plans to launch crypto funds worth $4.5bn, FTX last month unveiled a $2bn crypto VC fund and Crypto.com is growing its venture capital arm to $500m.
“2021 was a fantastic year for crypto,” Jon Russell, a partner at Crypto.com capital, told Morning Wire.
“Both retail and institutional participation in the space skyrocketed and Crypto is now part of mainstream culture,” he continued, noting that the industry grew by a factor of three, from about 100m global crypto owners to almost 300m.
Russell appeared unphased about the decision to launch an enormous crypto VC fund in the midst of a bear market, which has this month seen Bitcoin shed over 50 per cent of its value compared to an all time high of $69,000 reached in November.
“At Crypto.com, we are less concerned with the day-to-day or month-to-month movements in the market,” said Russell, adding that the company takes a long-term view of the industry which he believes will be dominated by web3 technology, which promises to transform the internet, by the end of the decade.
“We expect global crypto users to hit one billion as soon as the end of this year,” Russell revealed.
Rapidly accelerating global crypto adoption, maturing business models and institutional participation have all added to the perceived legitimacy of digital assets, according to analysts at Pitchbook.
A clear beneficiary of rising VC investment has been crypto asset custodian Fireblocks, which last week raised $550m in a funding round, giving the firm a valuation of $8bn. The firm’s chief executive and co-founder Michael Shaulov, attributed rising VC investment to investors’ growing confidence in a maturing crypto industry.
“Most VC funds were just not comfortable with crypto, especially on the back of the crypto winter and the ICO burst that happened back in 2018,” said Shaulov, referencing the proliferation of initial coin offerings which occurred between 2017 and 2018, the vast majority of which turned out to be scams.
“Then 2021 came along and VC funds realised the companies that are operating in this space are scaling faster than anything we see outside of crypto,” Shaulov continued, noting that a growing appetite for crypto projects is helping to close the funding gap.
Brown, for one, thinks that surging investment in the crypto space is set to continue this year as high quality projects win the trust of VC investors.
“I think we’ll continue to see meaningful activity this year,” she revealed. “There are lots more projects being built that are good quality and attract high quality investors. I think that’s a positive indication for the growth of the market.”
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