Coinbase is a prime example of how venture funding for a great innovation can deliver amazing returns. Coinbase IPO came in April 2021 — it was an event that presented the world with the idea that Cryptocurrency is real.
The Coinbase crypto exchange came into existence 9 years ago and was valued at $65.3B for its stock market debut. Coinbase exited via direct listing rather than the common IPO route. This entails that Coinbase didn’t raise any money, but its shareholders and investors could sell shares and cash in their investments. Coinbase’s end-to-end product software engineering and IPO was the beginning of huge profits for VC investors.
Union Square Ventures invested $5M in Coinbase’s $6.1M Series A round in 2013, which valued Coinbase at $20M for 20 cents a share. Eight years later, the value of this investment was around $4.6B.
Andreessen Horowitz is the biggest investor in Coinbase. The famed VC led a $25M Series B round, purchasing shares at $1 a piece, and has since bought an additional 3.5M shares from USV. Overall, Andreessen’s stake in Coinbase was worth almost $10B in April 2021.
(Source: CBInsights)
State of VC Investments Today
The global value of the venture capital funding process in 2021 was $621 billion. It was more than double the value in 2020 when venture funding was $294 billion. The increase in investment comes from rather new innovations and technology coming into existence to overcome the post-pandemic challenges.
In 2021, a total of 1,556 rounds of venture funding for startups and enterprises took place. It was more than double the number of rounds in 2020, which stood at 620. Investments in promising technologies called for multiple rounds of funding to ensure funds are always available to startups.
FinTech companies raised the maximum amount of new venture funding. They raised nearly $132 billion, which accounted for 21% of all venture funding. The FinTech total grew by 169% when compared to 2020.
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The Changing Landscape of Venture Funding
Venture capital technology firms are taking increased risks and experimenting with their investments. Promising ideas, innovations & technology, product engineering services, and accessibility of resources are increasingly ensuring the success of startups with decent ideas.
The traditional types of venture funding are transforming. With companies like Tntra ventures, which provide IP-led product engineering and build an ecosystem for startups providing them the capital to sustain, venture funding is now taking a holistic approach to growth.
Let us look at how venture funding is changing.
- Multiple pathways to acquire funds
- The traditional route to venture funding was limited. Investors had a conventional mindset about startups and their success. Today, companies don’t have to depend on them. Pathways like crowdfund, Seed funding, angel investors, Tntra technology solutions and more are opening new doors to access capital for business success. Startups can acquire rolling funds that keep them financially healthy for a long time.
- Investment specialization is increasing
- Innovation technology ventures invest only in technology. Investors now specialize in investing in equipment companies. Specialization will multiply twofold. VC investors will have a specialized portfolio where they focus on one category or sector. Most of their investments will be focused on that particular area. It will provide them an upper hand in unserved industries and markets.
- Focus on value-adding investors
- Today, high valuations are a dime a dozen. However, these valuations occasionally bring any value to the investor. Companies like the Tntra Ventures team provide venture funding along with value-addition in the form of a whole innovation ecosystem. The goal is to help startups and companies achieve success by providing the funding and the ecosystem needed to build the company.
Conclusion
Venture capital strategy is changing at startups and companies. A software product engineering company like Tntra that offers services to succeed along with VC investment is becoming a primary player in the industry. Startups are approaching different routes to acquire venture funding as they move away from the traditional VC pathway. It would be exciting to see where the VC world goes in the next 5 to 10 years.
