Analysing VC Investments in Q1 22
- Over $12 billion in funding was raised across more than 355 funding rounds over the course of Q1 2022
- Most investments occurred in early-stage Seed and Series A funding rounds
- 36 high-value deals above $100 million accounted for 3/4th of the entire funding raised in the quarter
- Most funding flowed to the Blockchain sector, followed by Infrastructure projects — both of which saw a funding inflow of over $2 billion
- Although total funding to DeFi and GameFi was limited, both the sectors had the most deal flows for the quarter — largely due to the vast number of early-stage funding rounds
- Overall, the quarter saw the participation of over 300 different Venture Firms, coming from both traditional and crypto-native backgrounds
Before I go on with the research, make sure to check out our Venture Analytics website to get the most up-to-date deals and to go through our entire funding database for 2022.
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Now that we’ve got that out of the way, lets crack on with our detailed analysis of venture rounds for Q1.
Funding for Q1 22
Quarter 1 of 2022 has been quite a forgettable slow grind in the space as crypto markets took a turn for the worse. As fear and worry of capitulation along with the corrections occurring in stock markets tormented the sentiment of retail investors, the same could not be said about the Venture firms in the space. Q1 has accounted for one of the highest amounts of funding flowing through any quarter. In fact, the amount of funding in Q1 alone made up almost half of the $25 billion funding raised by crypto startups in 2021. The quarter saw investments from 300+ venture firms and over 100 angel investors.
Here is the expansive list of all the funding rounds in Q1:
Overall, a total of $12.5 Billion was raised by crypto start-ups in Q1 across various sectors.
Top Funding Rounds
Q1 of this year has seen multiple high profile funding rounds in the hundreds of millions, of which the largest include the following:
- Luna Foundation Guard - $1 Billion
The Luna Foundation Guard, the non-profit arm of the popular Terra ecosystem, raised a record $1 billion in OTC sale of Luna, to create a decentralised reserve for their UST stablecoin. The round was co-led by heavyweights 3 Arrows Capital and Jump Crypto, with the capital raised being used to purchase Bitcoin. Since this infusion, the Foundation has publicly announced the acquisition of large quantities of Bitcoin.
- Cross River - $650 Million
American Banking as a Service (BaaS) provider Cross River has raised a $650m funding round led by Eldridge and a16z. The financial services organisation provides crypto onramp, offramp, and lending services to multiple fintech and crypto companies like Coinbase. The company aims to gear itself toward a crypto-first strategy and increase its regulatory compliant offerings in the future.
- Fireblocks - $550 Million
Fireblocks, one of the largest Digital Assets Custodians that assist financial institutions to store cryptocurrencies raised $550M in a Series E funding round. The round was co-led by D1 Capital and Spark Capital and elevated its valuation to an astonishing $8 billion. This investment round makes Fireblocks the most valued digital assets infrastructure provider in the industry to date.
- ConsenSys - $450 Million
ConsenSys, the parent company behind popular cryptocurrency mobile wallet, Metamask, and other blockchain infrastructure products, has raised $450 million at a valuation of over $7 billion. The Series D round was led by ParaFi Capital. The web 3 company is the brainchild of Joseph Lubin, one of the co-founders of Ethereum. ConsenSys intends to use the proceeds from this round to convert it to Ethereum and manage the treasury.
- Polygon — $450 Million
Ethereum scaling solution Polygon raised $450 million in a funding round through the private sale of its native MATIC token. This first major financing round since Polygon’s inception in 2017 was led by Sequoia Capital India and saw participation from Tiger Global, Softbank, and many other prominent investors. Apart from the active POS sidechain, the team has expanded to work on optimistic and zk rollups by acquiring various development projects to bring it under its wings. The core team aims to secure polygons lead in mass adoption and invest in zero-knowledge rollup technology with this warchest.
- Yuga Labs — $450 Million
Yuga Labs, the parent company behind the popular NFT collection Bored Ape Yacht Club (BAYC), raised a $450 million seed round at a valuation of $4 billion. The round was led by a16z, and made history as the highest amount raised in a seed round. Notable investors of this seed round included Animoca Brands, Adidas, Google Ventures, and Samsung Electronics. Prior to the seed round announcement, Yuga labs purchased the intellectual property of rival Cryptopunk and launched its $APE token. Yuga labs intends to utilise this funding to build an NFT-based metaverse called ‘Otherside’ and incorporate its APE token into the system.
- FTX Exchange, FTX US - $400 Million
Popular Crypto trading exchange FTX raised $400m in a series D fundraise, bringing its valuation up to $32 billion. The round saw the participation of SoftBank, Singapore sovereign wealth fund Temasek Holdings, and Paradigm, among others. This round is the third to occur in the past 6 months, and the exchange has raised $1.8 bn through this period. This fundraise will support in introducing new products and expand FTX’s global reach.
In parallel with FTX Exchange’s $400m Series D round, FTX US raised its first round of funding since its inception in 2020. This round brings the US exchange’s valuation close to $8 billion. The round again saw participation from Japan’s SoftBank Group, Temasek Holdings, Paradigm and other VC firms. FTX US intends to use this capital infusion to better position itself to compete with the other exchanges and hire talented individuals.
- Compute North - $385 Million
Mining infrastructure firm Compute North raised a total of $385 million in equity and debt financing round. The firm provides clients with mining equipment and distributed computing hosting services within its data centre facilities in the US. Compute North intends to use this funding to expand and open up new data centre facilities across the US.
- Animoca Brands - $359 Million
Animoca Brands, a popular NFT and Metaverse investor, raised $359 million at a pre-money valuation of $5 billion. The round was led by Liberty City Ventures and followed the series C funding raised in December last year. The company is also an active investor in over 150 NFT and metaverse companies, including Axie Infinity, Opensea and Dapper Labs. Animoca Brands intend to continue its strategic investments, business development, and licenses for intellectual property.
- Opensea - $300 Million
Popular NFT marketplace, Opensea has raised $300 million in a Series C funding round co-led by Paradigm and Coatue. The funding round valued the marketplace at $13.3 bn, up from its $1.5 bn valuations during its series B in July last year. Opensea intends to use this capital for product development, hiring and improving its customer support.
- Other Funding Rounds above $100m
All in all, high-value funding rounds above $100 mil has made up approximately 75% of the total $12.6 bn in funding for Q1.
Funding Categorized by Sector
- Layer 1 Blockchain Investments
The most funding from Venture Capital firms in Q1 has flown towards layer 1 blockchain projects. The past 2 years saw massive deal flows and price appreciation of various blockchains having scaling capabilities.
Q1 saw large deals of already popular Layer 1’s like Luna, Helium, and Mina. However, multiple relatively unknown blockchains raised funding rounds, some for the first time. Several blockchains in this funding list focus on privacy, such as the Secret Network and Aleo. Apart from this privacy focus, the list also contains a couple of blockchains having their own twist on consensus mechanisms — like Subspace labs using Proof-of-Capacity and Humanode using a combination of Proof-of-Uniqueness & Proof-of-Existence. Overall, $2.2 bn in funding went to the blockchain sector in Q1.
- Infrastructure
Infrastructure projects received the second most funding amount. Q1 saw a large number of projects relating to developer platforms and tools getting significant funding from investors. Developer powerhouse Alchemy, Data Indexer graph protocol were some of the dev infrastructure projects to obtain funding.
- NFT’s
NFTs have been popping off throughout Q1, and so have venture investments in this sector. Apart from Yuga Labs’ funding round, Punks Vault, the NFT startup behind the popular NFT collection Punks Comic, also obtained funding to use NFTs in more entertainment fronts such as movies.
Multiple NFT marketplaces across various chains obtained funding this quarter. Well-known Ethereum NFT marketplace Opensea, Solana marketplace Magic Eden and newer marketplaces like Hyperspace and Burnt Finance received funding. In addition, specialised niche NFT platforms, including Tom Brady’s celebrity-focused Autograph, Music NFT marketplace Unblocked, Toy/collectable marketplace Ucollex, and pro-trader focused marketplace Blur, also found the list.
- Layer 2 & Scaling solutions
Layer 2 and scaling solutions projects also saw the list of funding rounds in Q1. Apart from already discussed Polygon, Layer 2 scaling solution using optimistic rollups, Optimism, received significant funding. Additionally, on the Ethereum scaling front, NFT platform using starkware, Immutable, was also able to raise a round. Other layer 2 investments included blockchain startup Trust Machines, which aims to create a layer above bitcoin to enhance its web3 capability, and Worldcoin, a layer 2 above Ethereum.
- DeFi
A large number of DeFi projects received early-stage funding in Q1. Decentralised exchanges, prediction markets, lending, and yield markets were just some of the dapps making the list. Overall, the sector saw an inflow of over $490 million in funding.
- GameFi
Q1 has seen a huge uptick in the amount raised by GameFi projects. This sector saw a good number of gaming studios with team members transitioning from traditional gaming obtaining funding — some of which include Digital Insight Games and Emergent games.
Guilds such as Ancient8 and IndiGG had also obtained funding in the quarter. Funding for guilds and game studios was nowhere near the funding raised for games in the sector. Many games that are still in development managed to raise a round from investors.
In total, the GameFi sector accounted for $323 million in funding.
Total Investments per Category
Although Layer 1 blockchains have obtained the largest amount of funding this quarter, the total investments per category provides us with a different picture. DeFi dominates the number of deals with over 43 deals by VCs, closely followed by GameFi projects.
This difference between funding rounds and number of investments per sector is mainly due to the fact that most deals in certain sectors are primarily early-stage and seed rounds.
Most Active Venture Firms in Q1
- Animoca Brands (70 Investments)
Animoca Brands has become the most active VC firm by investing in 70 companies in Q1 alone. In addition, the gaming and NFT-focused firm has almost invested in as many companies as it had invested in 2021 as a whole. Of these 70 investments, the firm has been the lead investor for 33 rounds. Some of its more significant investments include Ethereum scaling solution, Polygon; the company behind Bored Ape, Yuga Labs; Metaverse builder, Everyrealm; digital assets company, Hex Trust; and Solana NFT, Metaplex.
- Coinbase Ventures (44 Investments)
Coinbase Ventures, the well-known venture arm of Coinbase Exchange, invested in 44 companies in the crypto space. This makes Q1 22 the highest deal flow for the venture firm, beating its Q4 2021 record of 32 investments. Notable investments from Coinbase ventures include omnichain protocol, Layerzero labs; layer 1 blockchain, Aptos; digital assets company, Amber Group; Middle East crypto exchange, Rain; and popular portfolio tracker, CoinTracker.
- Alameda Research (34 Investments)
One of the largest quantitative trading firms in the crypto space Alameda Research, started by Sam Bankman-Fried has invested in 34 companies throughout Q1. Some of the firm’s significant investments include NFT Layer 2 solution, Immutable; Layer 1 blockchain, Near Protocol; Digital Assets platform, Seba Bank; and Ethereum scaling solution, Polygon.
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Disclaimer: None of the information provided in the research article constitutes investment advice. Please do your own research before investing in any of these projects discussed in this article.
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