Blockchain Capital Raises $580M for Two New Crypto Funds

TL;DR

• Blockchain Capital closed its sixth and first opportunity funds, partnering with companies like Visa and PayPal.
• The firm said that volatility in the sector over the past year or two has revealed the hazards of short-term thinking, exposing many who misjudged this nascent technology.

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Crypto VC Scores $580M in Funding for Two New Funds

San Francisco’s Blockchain Capital recently raised $580 million for two fresh cryptocurrency investment funds. 

Established in 2013, the American Crypto VC unveiled its sixth venture fund for early-stage companies and its debut opportunity fund, accumulating $580 million collectively. 

Visa, the payments juggernaut, was among the investors. Notably, Visa and PayPal had previously poured capital into Blockchain Capital’s fifth round, amassing $300 million in 2021. 

Even though venture investments in crypto-centric startups have plummeted over the preceding year, Blockchain Capital has sustained its momentum. In August, various crypto companies have raised less than $500 million, the lowest figure in over two years. 

Blockchain Capital has recently spearheaded some notable later-stage funding rounds, such as $115 million for Tools For Humanity and $40 million for RISC Zero. 

We're thrilled to share the closing of 2 new funds – our 6th early stage fund and 1st opportunity fund.

Together, they total $580 million and serve to reinforce our commitment to leading the global transition to decentralized, blockchain-based systems. ↓https://t.co/Vr2uYnGlF7

— Blockchain Capital (@blockchaincap) September 18, 2023

The company focuses on Gaming, DeFi, consumer, and social realism. 

Reflecting on the recent turbulence in the crypto sector, the firm remarked that the past couple of years showcased the perils of myopic strategies, highlighting those who misinterpreted this budding tech.

VC Funding in Crypto

Crypto investment activity hit its lowest point since Q4 2020. 

PitchBook’s study revealed a 14.7% dip in deal value and a 16.3% reduction in the number of deals concerning global venture capital funding in crypto businesses. 

This downturn represents the fifth successive quarter where crypto investment has waned. However, blockchain infrastructure endeavors still commanded hefty investments. 

LayerZero secured a noteworthy $120 million in their Series B round, bringing their valuation to a striking $3 billion. Worldcoin, on the other hand, raised $115 million in its Series C round. 

Gensyn and Together also clinched substantial Series A funds, amounting to $43 million and $20 million, respectively. 

Yet, there’s no consistent pattern in valuation and deal sizes. While seed rounds witnessed an 18.1% upswing, early and late-stage rounds contracted by 20.3% and 15.8%.

Despite initial soaring valuations for down-rounds and later stages, these figures plummeted significantly, influenced by the limited data available and the discretion maintained around down-rounds.

Across 2023’s investment phases, the average deal size has shrunk marginally below 10%. Seed, early-stage, and late-stage investments averaged about $2.3 million, $5.1 million, and $10 million in that order.

Several factors caused the downturn in crypto investments, the first being the fall of FTX. 

Interestingly, the crypto exchange was one of the largest beneficiaries of VC funding in the crypto industry, with more than $1 billion raised from prominent firms. 

Do you think the crypto industry will return to its previous funding sizes? When the bull market hits, the rounds we thought were big will seem so small…

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