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US Dominates Crypto VC with Top 300 Firms Managing $83.9 Billion in Assets

A recent analysis by Coinstack Partners, a Web3 startup advisory firm, has revealed that the world’s top 300 cryptocurrency venture capital firms have a total of $83.9 billion in assets under management. The founder of Coinstack Partners, Ryan Alice, shared his findings on his blog on March 21, detailing the distribution of these VC firms across major cities.

San Francisco came out on top with the highest number of VCs, followed by New York, Hong Kong, Singapore, Austin, London, and Shanghai. The top 50 venture capital funds that focus on the cryptocurrency industry have a total of $59.6 billion under their management.

Among these funds, the SF Bay Area holds a dominant position, with a 45.16% market share in terms of capital under management. In fact, the Bay Area’s capital under management of more than $26 billion is almost equivalent to the combined capital under management of all other global cities.

The United States is dominant in the crypto VC game, at least among the top 50 firms by fund size.

The report also highlighted a decline in new investment by VCs in the fourth quarter of 2022, with $2.5 billion being invested, down 77% from $1.1 billion in the first quarter of the same year. However, there was an increase in investment in February 2023, with $872 million being invested, up 52% from the previous month’s $574 million.

Currently, there are 19 crypto venture capital firms that have invested $1 billion or more into the cryptocurrency industry.

Despite the recent surge in VC investment, the report also showed a significant drop in investment by VCs in cryptocurrency companies compared to the same period last year, with a decline of 91% in January 2023. This drop is attributed to the series of scandals that occurred in the cryptocurrency industry, such as the Terra-Luna incident and the collapse of the cryptocurrency exchange FTX, causing investors to lose interest in centralized cryptocurrency finance players.

The crypto/blockchain venture capital sector had a record-breaking year in 2022, with over $26.2 billion invested in companies, beating out the previous year’s total of $25.1 billion, as reported by Pitchbook. However, a closer look at the data by quarter reveals that activity peaked in Q1 2022 with over $11 billion invested and decreased to $2.5 billion in Q4.

The current trend in Q1 2023 shows a decrease in new capital invested, with an expected amount of around $1.8 billion, which is the lowest since Q4 2020. Nevertheless, based on the significant increase in February 2023 compared to January 2023, it appears that the sector is trending upwards as we head into Q2 2023, and smart firms are making their bets for the next cycle.

When it comes to exits, 2021 and 2022 both had around 70 major VC equity exits, not to mention the liquidity from token investments. Although exits are down for 2023, the long-term trend indicates that the industry is here to stay.

The report also indicated that VC officials are focusing more on decentralized finance (DeFi) rather than centralized finance players. Inter-blockchain portals, on-chain wallets, digital identities, non-fungible tokens (NFTs), and decentralized autonomous organizations (DAOs) were also among the areas that VCs are currently showing interest in.

The findings of this report highlight the dynamic nature of the cryptocurrency industry, with VC investment shifting towards areas such as DeFi and away from centralized finance players. As the cryptocurrency market continues to evolve, it will be interesting to see how these trends change over time and which areas emerge as the most promising for VC investment.

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