Venture capital firms have poured billions into the sector this year despite an environment of regulatory uncertainty, America’s war on crypto, and a bear market.
Venture capital investment usually slows down during bear markets, but several large crypto and Web3 investments have already been made this year.
A backdrop of regulatory uncertainty and an outright attack on the sector in the United States doesn’t appear to have deterred investors.
On April 18, the DeFi investor highlighted some of the biggest fundraises in the crypto and Web3 sector so far in 2023.
Venture Capital Keeps Flowing
Some of the industry’s largest VC firms, such as Three Arrows Capital and Alameda Research, have collapsed. However, “crisis means opportunity,” observed the analyst.
LayerZero raised $120 million this year from a16z and Sequoia Capital, among others. The protocol facilitates the creation of cross-chain dApps that are interoperable across all the major chains. It has been valued at around $3 billion following its $135 million Series A in March 2022.
Scroll ZKP secured $50 million in funding at a $1.8 billion valuation with investors, including Polychain Capital and Sequoia. The project enables Ethereum Virtual Machine (EVM) smart contract development.
Ethereum restaking platform Eigenlayer also raised $50 million in a round led by Blockchain Capital. The protocol enables ETH to be restaked into other networks to boost their security and crypto economics.
Artificial intelligence-focused crypto protocol Fetch.ai raised $40 million from market maker and investment firm DWF Labs. The platform intends to use AI to automate tasks such as executing transactions.
Other crypto and Web3 projects that have raised VC funding this year include social platform Plai Labs with $32 million and optimized trading platform Sei Network with $30 million.
Pivot to Asia
Furthermore, companies operating in the crypto sector are growing increasingly wary of the United States and are looking East toward Asia.
A number of large multi-million dollar funds have also been launched to invest in Asian Web3 and crypto startups. These include the $100 million Bitget Web3 Fund announced earlier this month.
The aim of the Asia-focused fund is to “foster a positive attitude towards the digital currencies economy and support the development of the web3 environment,” according to Bitget.
In late March, Hong Kong investment firm ProDigital Futures also announced plans to invest $100 million in crypto and Web3 startups in the region.
Hong Kong could become a hub for VC investment when it rolls out its crypto framework in June. Big money from mainland China is poised to enter the sector through this legal avenue.