Venture capitalists (VCs) have poured billions into crypto and blockchain startups this year, especially into the Web3 and Ethereum layer-2 scaling solutions space, despite apparent overall bearish sentiments.
According to a report compiled by financial services and investment management firm Galaxy Digital, VCs have invested over $10 billion in crypto startups in the first quarter of this year.
Just earlier this week, VC giant Andreessen Horowitz announced the close of a $4.5bn crypto fund, that focuses on Web3 startups.
Also, a group of former executives from one of the largest global cryptocurrency exchanges Binance announced a $100 million venture fund called Old Fashion Research earlier this week, to bring greater crypto adoption to growing markets like Latin America and Africa.
Singapore-based VC firm NGC Ventures also launched a $100m fund dedicated to high potential Web3 projects and metaverse economies.
Experts say VCs bet on blockchain tech
According to experts, blockchain and not crypto, is the underlying reason for these investments, with crypto being one of the use cases of the blockchain. The possibilities of new use cases, Web 3.0, and accelerated adoption of blockchain technology – all add to the uptick in investments with scale, growth, and returns all on the horizon.
The high degree of market volatility that crypto markets are currently experiencing can elicit fear among some investor categories and undercut overall ecosystem sentiment in the short run. However, VCs generally view the market landscape with a wider aperture and execute a consistent, measured approach to building their portfolios. Usually, a foundational market thesis guides their investment rationale.
Roderik van der Graaf, Founder, of Lemniscap
van der Graaf, the founder of the investment firm specializing in crypto and blockchain technology, adds that market downturns do not undermine this thesis in the short term, in fact, can actually serve as a long-term cleansing force,…
