Blockchain technologies, hailed as the most significant advancement since the internet’s inception, are the latest buzzword in the finance industry. According to Crunchbase data, global venture funding broke records across the board last year, with investment more than tenfold higher than a decade ago. While 2021 was a record year for bitcoin prime startup investments, January 2022 data shows even more capital flow this year.
As reported by CB Insights in a report dubbed the State of Blockchain 2021, venture capital funding valued at around $25.2 billion was invested into blockchain startups just last year alone indicating an increase of 710%. Data from the report also indicated the highest number of funding deals was in the United States with a total of 157 deals, generating about $6.20 in int the fourth quarter of 2021. The report indicated that institutional and consumer demand for crypto services and products were the primary forces driving global growth.
According to CD Insight’s senior analyst, Chris Bendtsen, the reports contain data from private marketing funding from more than 3,000 crypto firms and blockchain the company monitors regularly. While the report’s title refers to the blockchain, it also discusses cryptocurrency, non-fungible tokens (NFTs), decentralized finance (DeFi), and enterprise blockchain. He did, however, clarify that a larger percentage of the VC funding noted in the report went to startups primarily focused on crypto.
According to the report, crypto exchanges and brokerages received $1 out of every $4 in funding, accounting for a quarter of all global blockchain funding in 2021.
Bendtsen went on to say that global venture capital funding for cryptocurrency custody and providers of crypto wallets attained $6.3 billion in 2021. “At the start of last year, a larger percentage of funding was directed to exchanges that are consumer-driven but there was an eventual shift which saw large funding directed to crypto custody custodians and providers.
According to the CEO of Fireblocks, Michael Shaulov, investors are now focusing more on wallet and custody providers since they prove to be the most difficult obstacle for institution participatory ventures in the space. He went on to say that having the right tech and direct solution dir custody can help plug knyk the crypto capital markets which will ultimately cha he individuals and businesses alike.
According to him, their investors regard them as the shovels and picks of the crypto enterprise, serving as a gateway for them to invest in cryptocurrency. Everything from settlement networks to compliance integration with Elliptic and Chainalysis and direct custody wallets and settlement including access to staking providers.
Shaulov also revealed that Fireblocks intends to broaden its offering to add high-value securing transactions involving NFTs and DeFi. This is critical, especially given the rise in scams and fraudulent activities in the Defi and NFT sectors.
The CB Insights reports found that even though fraudulent activities are beginning to unfold in the NFT space, funding disbursed into NFT startups increased by a 130x margin. In 2020, VC funding generated ankle $37 million which increased to baker $4.7 billion in 2021. According to data available gaming infrastructure and marketplaces are one of the top three categories that are greatly influencing the funding craze.
Due to the ongoing impact of the pandemic, the corresponding shift to cloud services, and the opening up of public markets, unrivaled venture investment went into technology startups in 2021. Investors responded to these trends by investing in private equity at an unprecedented rate.
Blockchain and distributed ledger technology (DLT) are among the hottest trends in business, finance, and a variety of other industries. Following the rise in popularity of cryptocurrencies, their introduction into the mainstream has created new investment opportunities and sectors. Many well-known technology companies are heavily investing in blockchain and distributed ledger technology.
The EU is funding blockchain research and innovation through grants and prizes, as well as by supporting investments. The European Commission launched a pre-commercial procurement action as part of Horizon 2020 funding support to prepare for the future capabilities of the European Blockchain Services Infrastructure (EBSI).
Looking ahead, the increase in early-stage funding predicts a robust venture funding environment in 2022 as these companies expand.