2021 was an interesting year in the crypto world. Bitcoin (BTC) hit all-time highs in several different metrics including adoption, media coverage and price action. It has been exciting to see all of the coverage and attention being paid to everything crypto including interest in nonfungible tokens (NFTs), decentralized finance (DeFi) and even large publicly traded companies like MicroStrategy holding serious amounts of BTC on its balance sheet. All of this is the public face of the crypto industry.
However, this does not happen on its own. There are teams of people and projects working every day to improve existing applications for crypto and trying to be the next DeFi phenomenon, NFT craze or solution to a legacy problem that only blockchain can efficiently solve.
Pulling from the Cointelegraph Research Terminal’s database of venture capitalist deals, mergers and acquisitions (M&A) activity, investors and crypto companies, this 12-page report shows insights from investment activities in 2021. The report brings meaningful insights into the trends over the past few years and what VCs concentrated on in 2021.
The next block
The next stages of the blockchain revolution are building behind the scenes, but this takes time, and an important aspect that can be overlooked is capital investment. Venture Capital (VC) can come from many different sources such as high-net-worth individuals (HNWI), family offices, institutions, funds and even decentralized autonomous organizations (DAOs).
Knowing what is being built, who is behind it and the network helping to build a project can help interested parties get a leg up on the future of the blockchain industry, as opposed to reading online news articles about the results after the fact.
The Cointelegraph Research Terminal, in conjunction with Keychain Ventures, will publish quarterly reports on the events behind the scenes on the inflows of capital from VC into the blockchain industry. Before publishing the 2022 Q1 VC report, Cointelegraph Research will release a 12-page report that highlights VC activity in 2021.
Venture capital interest in crypto and blockchain is on the rise
2021 saw an unprecedented rise in active deals and total capital inflows. In 2020, there were 838 deals with an aggregate capital total of $4.9 billion. The number of deals jumped in 2021 to 1349 deals and just under $30.5 billion in capital investments.
The worldwide impact of COVID-19 accelerated interest in digital assets, and mainstream firms such as Visa, Mastercard, PayPal and Nike all invested heavily into different sectors of the blockchain space including DeFi, infrastructure and NFTs.
The top ten most active VC funds comprised around 65% of all individual deal activity in 2021. Nine of the ten favored DeFi for investment in 2021, except for Animoca Brands, which went against the norm and heavily invested in NFTs.
The second most invested sector was NFTs, and third place was shared between Web3 and Infrastructure. CeFi, interestingly enough, was the least invested sector. Only Alameda Research and Coinbase Ventures invested in the double-digit percentages of their overall activity.
Considering all individual investments in 2021, the majority of VC investment rounds were in Pre-Seed & Seed Rounds. However, these rounds did not gain the greatest capital funding compared to others. Series B, for example, had only 61 rounds yet garnered $6.8 billion. Post-Series B's Expansion rounds, which include debt financing, strategic partnerships, and treasury diversification, had over 200 rounds and almost $10.27 billion in investments.
Mostly acquisitions in the world of crypto 2021 M&A
There were significant deals in the Mergers & Acquisitions department in 2021. The major concentration on acquisitions over mergers in the business cycle stage of the blockchain industry does make sense, as it has not reached any real maturity level yet.
While almost every deal on this list was of high importance, several stand out for their greater import to the blockchain industry and the direction of markets in general. These include Mastercard acquiring CipherTrace, PayPal's procurement of Curv, Visa obtaining Tink, and Nike buying RTFKT Studios.
These strategic purchases have significant meanings for Mastercard, PayPal, and Visa's actions will expand each corporation's involvement in DeFi and Infrastructure such as fiat on and off-ramps, payment gateways, and systems that leverage blockchain's unique technological advantages like triple-ledger accounting. Nike's acquisition of RTFKT Studios shows a willingness to embrace the expanding marketplace interest in NFTs, which can have a large impact on the sports world.
Quarterly VC reports from Cointelegraph Research Terminal and Keychain Ventures
The report pulls from Cointelegraph Research Terminals' expansive database along with analysis from Michael Tabone, an Economist from Cointelegraph Research. Michael has an extensive background in economics, business, finance, cryptocurrency, blockchain technology, and working with emerging technologies. Besides working for Cointelegraph Research, Michael is a Ph.D. candidate working on his dissertation, which is focused on the theory and application of DAOs.
Keychain Ventures is a crypto investment firm that engages in investing different funds in the blockchain space. Keychain Ventures, along with Cointelegraph Research, will be presenting quarterly interviews with VC firms as well as crypto/blockchain projects which have recently gone through a funding round. These interviews will open up different viewpoints of investment practices from all parties.
This article is for information purposes only and represents neither investment advice nor an investment analysis or an invitation to buy or sell financial instruments. Specifically, the document does not serve as a substitute for individual investment or other advice.