- Crypto startups have hauled over $101 billion since 2014.
- VC deals and token sales represent the major propellant of the crypto industry’s growth.
- Investors are scared by blow-ups like the situation with Sam Bankman-Fried’s FTX.
According to data from DeFiLlama, crypto startups have hauled over $101 billion since 2014 across 5,287 funding rounds. The Block Research shows that a significant chunk of this investment came in after 2017, with the crypto industry attracting more than $95 billion of cumulative investment since then.
Meanwhile, a Bloomberg analysis reveals that venture capital deals and token sales represent the major propellant of the crypto industry’s growth concerning fundraising. However, there are mixed results among investors within the crypto ecosystem following the varying outcomes among the projects they invested in.
Notably, the analysis clarified that the pattern of exits in the crypto industry has been different, not following the traditional trend. Paul Veradittakit, the managing partner at Pantera Capital, thinks the exits are taking longer than usual, highlighting Coinbase Global Inc.’s $86 billion direct listing on the Nasdaq in 2021 during the last crypto bull market as a notable exception.
One of the crucial factors worth noting is that investors have also been scared by blow-ups like the situations with Sam Bankman-Fried’s FTX and crypto lender BlockFi. Bloomberg’s analysts cited Tiger Global Management LLC and Temasek Holdings Pte as VCs that have retreated from the sector.
Temasek confirmed last year that it had no plans to invest in crypto exchanges after losing its $275 million stake in FTX. Situations involving VC withdrawals from the sector led to a sharp drop in fundraising by crypto startups, which peaked at $36.4 billion in 2021. As of Blommberg’s report, crypto startups’ fundraising has dropped to $4.2 billion, its lowest level since 2016, according to data from DeFiLlama.
Ray Hindi, CEO of L1 Digital, thinks institutional backers that lost money on crypto bets did so because they arrived too late or were “lured into” investing in equity. According to Hindi, purchasing tokens in early-stage funding is a safer investment model. He noted that the sales of such volatile digital assets are often possible relatively swiftly and can generate short-term returns.
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