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Venture capitalists bet big on blockchain – despite 99% failure rate

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Despite the drizzle and sluggish cryptocurrency prices, there was a sense that we were witnessing history at the recent Nordic Fintech Week in Denmark.

Cryptocurrencies, blockchain and fintech are gaining a large share of venture capital (VC) funds and growing their share. That figure will reach $25.2 billion (R455.9 billion) in 2021, an increase of 800% from 2020. And things are just getting started.

Fintech experts say ‘pessimists’ like to whack the never-ending plummeting Bitcoin price, but this ‘crypto winter’ nonetheless promises $31 billion in VC investment in 2022. It is expected to bring in US$ (R560.8 billion). , investors and startup advisors Mike Segal.

“Venture capital is an industry with a 99% failure rate and very high returns,” says Sigal.

“To do this, the industry has developed a unique way of investing in disruptive innovation over the last 80 years.”

There’s a lot to learn by looking at how VCs do it. What they are currently doing is investing in crypto-related technology.

It is categorized as:

  • Blockchain technology – the backbone of all crypto.
  • NFTs (Non-Fungible Tokens) are more than just expensive artwork, they are also an integral part of the Metaverse.
  • Metaverse (a suite of technologies including virtual and augmented reality)
  • Smart contracts, and all the cool things you can do with them (like performing financial transactions without human intervention).
  • Decentralized Finance (DeFi) – A growing market where people can lend, borrow, earn interest, and trade without going through credit committees or human agents.
  • Web3 – Decentralized storage of data using blockchain technology. The current version of the Internet is Web2, owned by technology giants such as Facebook and Google. Web3 is more private, allowing users to own their own digital footprint and monetize it.

The number of financing deals for the above technologies is projected to reach 1,842 in 2022 from 1,312 in 2021.

A series of fundraising deals

New VC deals for cryptocurrency companies are pouring in. For example, the FTX crypto exchange, which was reportedly in talks to raise $1 billion in funding just days ago, is valued at a staggering $32 billion. CNBC.

Crypto data company Messari has raised $35 million in Series B funding. The company transforms blockchain data into standardized reports.

BlackRock, the world’s largest asset manager, launched a private trust in August to give institutional investors direct exposure to Bitcoin.

In August, as we entered the supposed “crypto winter,” the world’s most influential investment management firm decided to bet on Bitcoin. This in itself is a bet for unrequited institutional investors on this new digital asset.

metaverse

Today, the Metaverse is a distant concept, a vision of the merging of the real and digital worlds. No one is entirely sure what it looks like now. We’ll all be wearing virtual reality goggles, but VC is sure of one thing. It relies heavily on blockchains, tokens, and NFTs.

Funding for the Metaverse skyrocketed in 2021 when Facebook changed its name to Meta and announced its vision for the Metaverse. By September 2022, Metaverse startups and companies have closed more funding than all of 2021.

online game

Online gaming has welcomed NFTs and tokens with open arms.

NFTs allow users to own completely unique items in-game. Connecting to the blockchain allows users to easily trade their tokens and developers to easily monetize their games.

Global revenue for the online gaming market in 2019 was $152 billion, Segal said in his presentation. By comparison, the music industry is only a third of that, worth $57 billion.

Adoption of blockchain technology by giant corporations

It’s hard to find a single giant company that hasn’t stepped into the blockchain, cryptocurrency, metaverse, or NFT space.

Luxury jewelery maker Tiffany & Co has unveiled an NFT collection of 250 CryptoPunks. This is one of our most popular NFT collections and is connected to a real pendant.

The project sold out in 22 minutes and raised over $12.5 million in ETH. report blockwork.

That was back in August, in the midst of a supposed crypto winter.

Atari, Disney, Gucci, McDonald’s, Coca-Cola, Amazon, Shopify, Netflix, Google, and countless other giants are just a few of the major companies interested in cryptocurrencies, blockchains, metaverses, or NFTs. It’s a handful.

Nike has made over $185.3 million in NFTs. A user has purchased a sneaker and also has a metaverse/NFT version of it to indicate that they are the sole owner of that sneaker. Think of it as a certificate of authenticity.

Andreessen Horowitz

Andreessen Horowitz, one of the world’s most influential VCs, raised a $4.5 billion cryptocurrency fund in May. By August, he decided to go all out with betting on cryptocurrencies in order to “de-concentrate the power of Big Tech.” reported by the Financial Times.

That Big Tech power is the five companies (Netflix, Google, Amazon, Meta (Facebook), Microsoft, and Apple) that probably control 43% of internet traffic.

According to the Financial Times, the venture capital firm was “looking to hone a new investment strategy built around cryptocurrencies and digital tokens.”

Blockchain takes hold

Sigal’s talk at Nordic Fintech Week wasn’t the only highlight of how deeply this technology has permeated the business world.

Global Blockchain Business Council CEO Sandra Ro said a quick search for “blockchain jobs” on LinkedIn brings up more than 50,000 results. The same search a few years ago only found a few hundred.

Blockchain is a thing. It’s not just a fad.

Interest explodes and never goes away. And Segal’s final message was clear. Companies that don’t jump on the bandwagon now miss out on big opportunities.

R Paulo Delgado is a crypto writer looking to the strange and human stories behind the always fascinating leaps and stumbling blocks of this new asset class.

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