The blockchain industry had a lot of activity in 2017 with more than $5.6 billion raised globally through ICOs and the total market cap hitting an all-time high at over $600 billion, but there was no corresponding increase in venture capital funding. The number of publicly traded companies on both exchanges as well as private ones has not kept pace either. One possible explanation for this is that many investors are looking to get out before it’s too late, leaving less money for startups to grow their businesses.,
Overview of Blockchain Investment in 2021
- Number of Projects and Funding
In 2021, particularly after March, capital poured into the blockchain industry at a never-before-seen pace.
Footprint Analytics reports that there were 1,045 investment rounds last year, up from 167 in 2020, or a 525 percent rise. This produced $30.27 billion in total, an increase of 790 percent from $3.4 billion in 2020.
Monthly Investment Trend according to Footprint Analytics for 2021
- Which Sectors Received Funding?
DeFi continued to be a significant investment sector in 2021, attracting over 30% of all investment rounds, followed by NFT with 19% and blockchain infrastructure at 17%. A number of other sectors also become attractive investment opportunities.
Funding Categories by TVL according to Footprint Analytics in 2021
The most significant change from 2020 is the diminished importance of CeFi financing rounds (however, the few rounds that CeFi did get were especially large.)
Funding Categories by TVL in 2020, according to Footprint Analytics
- Funding Rounds’ Breakdown
Footprint Analytics estimates that more than half of the investment for 2021 came from seed rounds, with Series A and strategic finance following.
Funding Rounds for Footprint Analytics in 2021
This shows that blockchain technology is still in its infancy and that VC interest is regularly being drawn to a variety of different businesses. In the blockchain business, rounds often last a few months as opposed to years in the conventional venture capital market.
Only a select few proposals advanced through Round B. The majority of them are in DeFi or CeFi, including FTX.
- Who Financed Blockchain Technology?
With 119 total investments in 2021, AU21 led the fundraising organizations in terms of the rounds it supported. With 102 and 91, respectively, Coinbase Ventures and NGC Ventures came in second and third.
Ranking of the project number by funding institutions using Footprint Analytics
With its portfolio mostly concentrated on DeFi and NFT, AU21 Capital is a blockchain venture capital company with headquarters in San Francisco. It mostly made seed round investments.
One of the most active venture capital firms in the cryptocurrency industry, Coinbase Ventures, participated in more than 100 rounds in 2021, mostly in infrastructure and DeFi.
DeFi and infrastructure are also the focus of NGC Ventures’ portfolio, a fundraising platform established by prominent NEO community members and experienced investors in conventional financial markets.
Analysis of Blockchain Investment by Category in 2021
Click here to see the corresponding charts.
CeFi raised the most money in terms of total investment even if the number of rounds reduced. CeFi initiatives often have established protocols and a solid financial foundation since they are centralized projects.
CeFi Fundraising Amount according to Footprint Analytics
CeFi received $14.6 billion in total investment in 2021, much above those of other categories. The greatest month was October, when CeFi startups and established businesses closed $2.5 billion in agreements.
CeFi Fundraising Rounds according to Footprint Analytics
Additionally, CeFi is one of the only blockchain-related industries where a few businesses make it through the seed phase.
Amount of Funding for Each Project in CeFi According to Footprint Analytics
Trading app Robinhood, exchange FTX, and application service platform Revolut are the top three CeFi businesses in terms of fundraising.
The open, egalitarian, and decentralized character of the sector is embodied by DeFi, the core area of blockchain development.
DeFi Fundraising Amount according to Footprint Analytics
The overall amount invested in DeFi in 2021 was $2.64 billion, with over $100 million being invested in 11 out of the 12 months, with March, June, and December seeing the highest amounts.
DeFi Fundraising Rounds according to Footprint Analytics
The frequency of creative initiatives in the DeFi area and the quick iteration of technological advancements are inextricably linked to the number of financing rounds, which is still dominated by seed rounds.
Amount of Funding for Each Project in DeFi According to Footprint Analytics
BitDAO, a decentralized autonomous organization, FalconX, an asset trading platform, and 1inch, a decentralized aggregate exchange, are the top three DeFi initiatives by financing amount.
Unique digital assets known as NFTs are created on the blockchain. The public became aware of the metaverse when Collins Dictionary declared NFT the term of the year.
NFT Fundraising Amount according to Footprint Analytics
Given the newness of the sector, seed rounds accounted for the bulk of funding.
Footprint Analytics – NFT Fundraising RoundsFootprint Analytics – Amount of Funding for Each Project in NFT
The greatest money was raised for the NFT platform Sorare, the blockchain gaming business Dapper Labs, and the NFT game Zepeto.
- Infrastructure fundraising
In the blockchain industry, infrastructure comes first. This area attracted more attention than ever in 2021 because to the many security breaches.
Infrastructure Fundraising Amount according to Footprint Analytics
Total financing for the infrastructure sector was $7.49 billion, with June seeing the highest monthly total of $1.3 billion.
Infrastructure Fundraising Rounds Based on Footprint Analytics
Series A and seed rounds continue to dominate the fundraising rounds. Blockchain infrastructure now needs a lot of financial assistance as it moves into the scale implementation phase.
Footprint Analytics: Infrastructure Project Funding for Each Project
Self-service miner GRIID, mining firm Genesis Digital Assets, and crypto hardware wallet Ledger were the projects with the greatest sums.
The concept of Web 3 is a new, blockchain-based iteration of the decentralized internet. Gavin Wood, a co-founder of Ethereum, first proposed the idea of Web 3 in 2014, but it wasn’t until 2021 that it really took off.
Web 3 Fundraising Amount according to Footprint Analytics
With an increase of over $1 billion in only one month in November, Web 3 financing reached a total of $2.2 billion.
Web 3 Fundraising Rounds according to Footprint Analytics
Due to the fact that Web 3 apps are still very much in their infancy, financing rounds for Web 3 are also mostly seed rounds.
Amount of Funding Allotted to Each Web 3 Project According to Footprint Analytics
The greatest financing went to Forte, a well-known provider of blockchain solutions for game producers, Mythical Games, a blockchain game, and Daml, a programming language for smart contracts.
3 Lessons from Blockchain Financing in 2021
- Numerous further fundraising rounds
Institutional investors started to take an interest in the blockchain business in 2021 as research and applications advanced because to its security and decentralized nature.
The amount of investment has grown by 790 percent, and there were 525 percent more fundraising rounds in 2021 than there were in 2020.
- a variety of topics and application situations
Many new blockchain-related sub-sectors appeared in 2021 as a result of the explosive growth of ideas like metaverse and NFT. Investors ready to stake money on the decentralized nature of the internet’s future became aware of the NFT, DAO, SocialFi, and GameFi initiatives as they evolved.
- early rounds of financing
Despite the press coverage, the majority of blockchain project financing phases are still in the early stages, indicating that the sector is still far from being fully mature. Due to the quick iteration and intense rivalry in this industry, many initiatives are abandoned.
Blockchain funding in the future
In 2022, there is potential for blockchain finance. Although infrastructure, NFT, and Web 3 are also gaining popularity as they become more widely used, CeFi and DeFi are still the key investment sectors.
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Date and Author: Lesley, January 13th, 2022
Footprint Analytics, data source
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