Venture capital firms are still pouring funds into crypto and Web3 projects, and the rate at which they are doing so has increased since the same time last year, despite the bear market.
According to the Woo Blockchain Monthly VC Funding Report, the total amount venture firms invested in Web3 startups in June was $3.67 billion.
That figure is down 18% from the $4.45 billion invested in May, but surprisingly up 60% from June 2021’s $2.3 billion.
Research citing Dove Metrics reported that there were 191 open investment projects for crypto venture firms last month. It is down 15% from 225 open rounds in May, but up 42% from June 2021 figures of 134 investment rounds.
CeFi Liquidation Protection
The high figures may have been somewhat skewed, as there were several high-profile funding and loan rounds for firms seeking to protect themselves from liquidation and bankruptcy. Wu Blockchain reported that centralized finance (CEFI) firms raised the most funds for the period:
“CEFI raised the most because of the number of institutions raising debt to avoid liquidation.”
The two biggest CeFi raises came from Sam Bankman-Fried’s FTX and Alameda, which lent $250 million to BlockFi and $200 million to Voyager Digital. This has sparked debate over how much of the industry Bankman-Fried now controls.
The two largest DeFi ledgers were the Capricorn stablecoin lending project and the Unigen exchange running on the Binance blockchain. The two secured a $200 million funding round.
Solana-based non-fungible token (NFT) marketplace Magic Eden also listed with a Series B of $130 million in June. There were several other notable investments for the month including Carbon Certificate, EcoWatt, and enterprise blockchain solutions to verify crypto infrastructure projects Prime Trust, Astra Protocol, and Kushki.
Last week, the venture capital firm focused on backing the future of Web3, Reciprocal Ventures, doubled down on the sector with an oversubscribed $68.5 million second fund.
Crypto Bear Market Deepens
Venture capital firms are rarely concerned about short-term market cycles and generally seek long-term investments.
With this bear market there is no end in sight in the short term. The crypto assets have consolidated over the weekend with little movement in either direction. As a result, the total market cap crossed $900 billion during the Asian trading session on Monday morning.
At the time of writing, both Bitcoin and Ethereum were trading below the peaks of the previous cycle at $19,146 and $1,057, respectively.