Venture capital: We all know that stinging feeling of the crypto winter that just won’t seem to go away. Few digital assets have emerged unscathed since things turned for the worse in November last year. Yet despite price action causing some to run for the exits, the smart money in venture capital is using the bear market as an opportunity to build.
In this short update, we’ll dig into some of the moves that leading Web3 venture capital firms are making, proving that if anything, the future remains as optimistic as ever.
It’s been a busy week for those keeping score of Web3 investments, but several stick out in particular. One such example is Mysten Labs that recently raised US$300 million for its Sui blockchain. Remarkably, it is yet to be launched.
Venture capital still likes JPEGs
For many, NFTs were likely their first experience of a crypto market slump. And we know that volumes are way down since their all-time high in May. According to The Block, September sales volume measures just US$62 million, down from the recent high of over US$1.5 billion. However this hasn’t stopped some NFTs from flying off the handle and continued investment in the space. Earlier this week, NFT collection Doodles raised US$54 million at a valuation of US$700 million to expand its ecosystem.
There’s plenty of cash to go around
A slew of another notable fundraises have occurred within the last few weeks alone, including:
- US$50 million by crypto market maker Portofino to support high-frequency traders;
- US$30 million by Diamond Standard, a blockchain startup tokenising diamonds;
- US$15 million in seed capital by Magna, a token management platform; and
- US$4 million by Sherlock, a crypto auditing and security platform.
Those figures however pale in comparison to a couple of hefty fundraises that are hard to ignore. Venture capital firm Bloccelerate, which previously led funding rounds in MakerDAO and Avalanche, announced this past week it was looking to raise US$100 million for its second fund.
But the crown surely goes to Northzone, a venture capital firm based in the UK that focuses on Web3 as a “core sector”. It raised a whopping US$1 billion this week to invest in “innovative technology” such as crypto startups across both the US and EU.
Given investment action over the last few weeks and positive news of The Merge success, it seems sentiment is on the up. As venture capital rockstar Mark Yusko regularly reminds his audience, “price is a liar”, and in the context of collapsed crypto prices and recent venture capital investment, this sentiment would appear to be true.
Legendary investor Benjamin Graham famously described the market in the short-term as a “voting machine” but a “weighing machine” in the long run. Put differently, capital allocators tend to ignore short-term volatility and focus instead on the long-term fundamentals.
If this most recent sample of fundraising is anything to go by, the folks with the deep pockets don’t give two shits about crypto’s recent price action — quite the contrary, they’re in construction mode and building for the next bull run.