As venture capital funds appear eager to enjoy the dizzying growth potential, funding for cryptocurrencies and blockchain startups will not slow down in 2021.
Venture capital funding for cryptocurrency and blockchain startups is expected to break records in 2021. Cryptocurrency companies received more funding in the first quarter of 2021 than in all of 2020.
In fact, in Q1 2021, three companies in the market attracted $1.1 billion in funding from backers, accounting for one-third of the total funding of cryptocurrency and blockchain startups reported in 2018.
Given the current bullish sentiment in the cryptocurrency arena, the capital needs of blockchain companies for venture capital may continue throughout the year.
This seed funding frenzy seems to extend to the retail sector, and original decentralized exchange products are often oversubscribed. As a result, IDO's native launch pad tokens are now some of the best performing tokens in the cryptocurrency space.
Private equity funding numbers in the blockchain field
In Q1 2021, 129 crypto and blockchain startups received approximately $2.6 billion in funding. This figure is already $ 300 million more than the total funding of such companies in 2020.
Cryptocurrency wallet provider Blockchain.com, lending company BlockFi and blockchain gaming studio Dapper Labs accounted for nearly half of the $2.6 billion in funding raised by industry startups in Q1 2021.
In late March, as sales of non-consumable NBA Top Shot tokens surged, Dapper Labs announced a $305 million investment from sports stars and other celebrities.
Since the emergence of the cryptocurrency field, funding from U.S. venture capital funds for cryptocurrency and blockchain startups has eclipsed numbers in other regions.
The potential for extraordinary earnings remains the driving force behind increased capital investment in cryptocurrency startups in blockchain and traditional VC funds.
In fact, it turns out that private equity income in the blockchain field has nothing to do with traditional assets. This trend provides some form of collateral for private equity funds looking to diversify their investment portfolios at an early stage.
Cryptocurrency not only has unprecedented growth potential, but also has considerable verifiability, especially after the acquisition of U.S. institutions in recent months, it is very attractive.
Considering the significant increase in funding for cryptocurrency startups in the first quarter of 2021, the relationship between blockchain-focused venture capital funds and the overall market may improve.
After peaking at nearly 2% during the bull market in 2017, by the end of 2020, blockchain private equity has fallen to less than 1% of the global venture capital market.
This decline can be attributed in part to trends that emerged after the 2018 bear market and the current coronavirus pandemic.
Between 2019 and 2020, blockchain-focused venture capital funding has fallen by 13%, while traditional equity funding has increased by 18% over the same period.