Compilation of the original text: Deep Tide TechFlow
Compilation of the original text: Deep Tide TechFlow
Following the release of Coinstack's popular 2022 list of cryptocurrency venture capital firms, the following report was produced last week, ranking the top 300 cryptocurrency venture capital funds in the world. This article will discuss the following categories:
Top cryptocurrency venture capital firms ranked by fund size;
Top cryptocurrency venture capital firms ranked by number of investments;
Top cryptocurrency venture capital firms ranked by number of investments in the last 12 months.
Let's start with some summary data:
The total capital under management of the world's top 300 cryptocurrency venture capital firms is $83.9 billion.
San Francisco is the number one city in the world for cryptocurrency VC capital, representing 45.16% of the total capital of the top 50 global cryptocurrency VC firms, followed by New York, Hong Kong, Singapore, Austin, London and Shanghai.
Even with a recession in the second half of 2022, 2022 remains the largest year in history for cryptocurrency venture capital, with more than $26.2 billion in new capital invested in companies, compared to $25.1 billion invested in 2021 Dollar.
New cryptocurrency VC funding in Q4 2022 ($2.5 billion) is 77% lower than in Q1 2022 ($11.2 billion). But we have passed the inflection point and are now headed upwards.
Venture capital firms invested $872 million in venture capital capital invested in crypto/blockchain companies in February 2023, a 52% increase from $574 million in January 2023.
This means that even in our lowest bear market moment, VC firms are still investing over $25M in equity in crypto/blockchain companies every business day (currently about $45M per business day). And that’s not even counting venture capital firms investing in tokens.
If you look at the broader picture, compared to the same period four years ago (Jan/Feb 2019), there is more VC capital being invested in companies now (Jan/Feb 2023) than during previous bear markets 3.1 times.
Therefore, even though the market is currently in a bear market, the capital flow is still 3 times higher than last time. The digital asset industry is maturing, and we see more institutional capital staying in the industry. This is a major event.
Compared to past recessions, the cryptocurrency venture capital market has not only survived, but is thriving and poised for a strong comeback in 2024/2025.
As we gear up for the Bitcoin halving in April 2024 and the resulting crypto bull run in 2025, we are starting to inflection point into the crypto venture capital space. Good times in our industry typically occur every four years and last about 18 months.
Now is the time to prepare for the next bull run.
At some point (if history has guided me, I expect around December 2024/January 2025), Bitcoin will again exceed $69,000 and Ethereum will exceed $4,800 - in the current sector capital allocators will look very smart. They rushed in while others were fleeing, realizing that smart contracts, distributed ledgers, always-open markets, and tokenized financial assets are fundamental technologies for the future of global finance.
The smartest VCs are betting now, as valuations are discounted — and amidst the market noise, there are ongoing investments in investment themes like Web3, Gamefi, DeFi, infrastructure, and DLT.
List of Cryptocurrency Venture Capital Institutions in 2023
Which crypto-focused VC firms are the biggest? Which are most actively investing in post-Terra/Three Arrows/Celsius/FTX events?
The largest cryptocurrency-focused VC firms by fund size are: A16Z Crypto, Binance Labs, Multicoin, Pantera, and Paradigm.
The top five cryptocurrency-focused VC firms by total cryptocurrency investment volume are: Coinbase Ventures, DCG, NGC, AU 21, and Animoca.
But which firms have led the way in new crypto VC investing over the past 12 months?
The most active cryptocurrency VC firms right now are: Big Brain Holdings, Shima Capital, Infinity Ventures, GSR, and MH Ventures.
Let's drill down and do a full ranking.
The world's largest cryptocurrency venture capital firms by fund size
The table below has been compiled using our own research as well as a combination of data sources from Pitchbook, Crunchbase, AUM 13 F, and company websites. When companies invest in areas other than blockchain/cryptocurrency, we only include investments and funds that are as focused as possible on the cryptocurrency space.
Below are the top 50 companies ranked by fund size. According to our research, 19 cryptocurrency VC firms have $1 billion or more earmarked for cryptocurrency investments.
Crypto Venture Capital Investments by City
The total capital under management of the top 50 cryptocurrency venture capital funds is $59.6 billion. Where are these funds distributed geographically? Let's look at the capital allocation by company headquarters:
The San Francisco Bay Area has a 45.2% market share of the top 50 global cryptocurrency venture capital firms and manages over $26 billion in capital, nearly equal to all other global cities combined.
The U.S. dominates the cryptocurrency venture capital space, at least among the top 50 firms by fund size.
Top 50 Cryptocurrency VC Firms Ranked by Number of Investments
Let us now rank the top cryptocurrency VC firms by the number of all investments they have made in the cryptocurrency/blockchain space. This will present a completely different picture of the top 50.
Top 50 most active crypto VCs in the past 12 months
Finally, let's look at overall cryptocurrency investment by the number of cryptocurrency investments over the past 12 months. This tells us who is currently active versus companies that were active in 2018-2021, and who may be particularly open to seed/early stage deals.
When we counted the data, we found the following.
Overall Crypto VC Sector Health
According to Pitchbook, 2022 will be the largest year in the history of cryptocurrency/blockchain venture capital investment, with more than $26.2 billion in new investment, which is only slightly higher than the $25.1 billion in 2021. Let's look at some of the charts.
However, judging from Pitchbook's quarterly data, the situation is different. Activity peaked in the first quarter of 2022, with just over $11 billion of newly invested capital, compared to just $2.5 billion in the fourth quarter.
New investments in the first quarter of 2023 are expected to be around $1.8 billion, the lowest figure since the fourth quarter of 2020.
However, based on the large increase in February 2023 relative to January, it looks like we've now turned the tide and the trend is picking up as we move into the second quarter of 2023. Smart companies are making next-cycle bets now.
From the perspective of exit strategy, there will be about 70 major cryptocurrency venture capital equity exits in 2021 and 2022 (not to mention the liquidity brought by all token investments). While exit strategies for 2023 are down, the long-term trend is clear. This industry is here to stay.
Which round of valuations are we currently seeing?
Finally, we'll cover the median estimated valuations for the seed and Series A cryptocurrency venture capital space. Below are the current median valuations for Seed, Series A and Series B deals (from January 1, 2023 to March 16, 2023).
Seed Deal Valuation
How have seed round valuations and funding amounts evolved over time in the cryptocurrency industry?
As shown below, the median seed round in 2023 is $3 million with an estimated pre-valuation of $22.8 million, with valuations ranging from $11 million to $43 million.
Interestingly, according to Pitchbook data, the average seed round valuation is actually higher today than in 2022, but the number of deals closed is about 50% lower than the 2022 average. Based on our own experience, most no-revenue seed deals in the crypto space have estimated pre-valuations in the range of $10-20 million — so perhaps Pitchbook’s 23 years to date for seed rounds in crypto companies There are data set limitations for the estimates.
Series A deal valuation
How have valuations and funding amounts for Series A deals in the cryptocurrency industry evolved over time?
The median Series A round in 2023 is $9.7 million, with an estimated pre-valuation of $90 million, with valuations ranging from $55 million to $115 million. These Series A deals tend to be allocated to companies with $1-10 million in annual revenue, achieved product-market fit, and are growing month-over-month during the current economic downturn.
Series B deal valuation
How have valuations and funding amounts for Series B deals in the cryptocurrency industry evolved over time?
The median Series B round in 2023 is $55 million, with an estimated pre-valuation of $740 million, up from $295 million in 2022. Only a handful (9) of Series B deals were completed in 2023, so this number will likely drop as more deals close. The 25-75% quantile for 2022 is $150 million to $1.25 billion.
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