After enduring a prolonged period of funding scarcity, the recent surge in the crypto market has reignited investor interest in blockchain and Web3 startups. Throughout November, the crypto sector experienced a revitalized funding landscape, with firms collectively securing $2.15 billion across 119 funding rounds, encompassing various forms of investment such as venture capital deals, debt financing, and Phoenix Group’s noteworthy $370 million IPO.
The health of fundraising prospects for blockchain and Web3 startups has historically been tethered to the overall performance of the crypto market. When crypto markets faced a downturn in the final months of 2022, investment activities witnessed a significant decline. However, the recent upswing in the market, coupled with a newfound enthusiasm from venture capital (VC) investors, has marked a resurgence in Web3 fundraising.
In November, Coinbase Ventures, a key player in the crypto space, notably participated in two substantial crypto investment rounds. The first involved a $110 million Series E funding for Blockchain.com, while the second was a $225 million round for Wormhole, elevating the blockchain interoperability platform to a $2.5 billion valuation.
Coinbase’s VC arm further demonstrated its commitment to emerging Decentralized Finance (DeFi) projects, investing in Definitive and participating in DeFi’s Initial Exchange Offering (IEO). Another influential investor, Andreessen Horowitz (A16z), led two financing rounds in November, supporting the Web3 restaurant loyalty platform Blackbird and Ethereum infrastructure developer Pimlico.
While IPOs and mega-rounds exceeding $100 million garnered attention, the smaller, early-stage VC investments played a pivotal role in supporting the broader crypto ecosystem. Numerous VC firms specialized in backing early-stage Web3 and DeFi startups with modest checks ranging from five to six figures. For instance, HashKey Capital engaged in six seed and pre-seed funding rounds in the past 30 days, typically contributing amounts under $1 million.
Adding to the VC landscape, Faction, a newcomer to the scene, emerged from stealth on November 9, unveiling a $285 million crypto venture fund aimed at opportunities in the Seed and Series A stages.
In essence, the flourishing of the crypto sector necessitates comprehensive support for businesses at all stages. As a new wave of crypto IPOs is anticipated in 2024, VC firms that participated in earlier funding rounds may soon realize returns on their investments, potentially injecting fresh capital into the sector and fostering a fundraising renaissance in the coming year.
