Q1 2022 venture capital activity in crypto set to outpace 2021

All the deals, trends, moves and investments in Q1 2022 across the blockchain landscape, brought to you by Cointelegraph Research.

The first quarter of 2022 saw unprecedented growth in terms of venture capital activity in different blockchain sectors. In 2021, venture capitalists poured in over $30 billion into infrastructure, nonfungible tokens (NFTs), decentralized finance (DeFi), centralized finance (CeFi) and Web3. That set the bar pretty high if 2022 was going to beat it. In the first quarter of 2022, capital inflows from venture capitalists were over $14.6 billion, or around 48% of all the capital investment by the last year. 

Over 500 individual deals were struck in the first three months of 2022 throughout the five major sectors listed above. Cointelegraph Research studied and analyzed its database of deals, mergers and acquisitions activity, investors, and crypto companies to produce a 12-page report on the major VC activities in the crypto sphere.

Leaving 2021 behind

Anyone interested in cryptocurrencies, blockchain and the future of this industry should pay close attention to the contents of this report. By studying what venture capitalists are doing and knowing the players who are investing in projects, and which platforms are being invested in, individuals can help stay on top and make informed decisions.

It takes more than just great technology for people to use a product. History is filled with great products that just did not have the right mix of marketing, management or capital to bring them successfully to market.

Venture capitalists aim to resolve these issues by investing more than just the capital needed to get a project off the ground but also provide a network of contacts that can provide solutions to the correct marketing and strategic management mix.

Download the full report here, complete with charts and infographics.

The Cointelegraph Research Terminal, together with Keychain Ventures, brings you a report that dives into the first three months of 2022. The 12-page report by Cointelegraph Research analyzes the most active investors, M&A, largest deals and new funds in Q1 2022.

Record-breaking number and value of deals

The first quarter of 2022 saw an unprecedented amount of capital inflows in the blockchain industry. Since the start of 2021, each quarter has continuously increased the total capital invested in this space, culminating in Q1 2022, which ushered in over $14.6 billion in VC investment. Each deal’s average U.S. dollar value has also increased and now stands at around $32.3 million for the last three months.

The number of individual deals also rose and broke the previous record, reaching over 500 in Q1 2022. The increase is likely to continue to trend higher, as the space is attracting new funds from Bain Capital and Sequoia Capital, long-time venture capital firms in traditional markets. The industry also saw consolidation through acquisitions by long-time crypto players like OpenSea, Coinbase, Fireblocks, FTX and Blockchain.com. In all cases, these strategic purchases expand the reach of each of the firms’ core business offerings.

The recently formed funds like Bain Capital and Haun Ventures are focused primarily on Web3 projects, which, interestingly enough, had the most involvement in 2022’s first quarter and overtook the DeFi sector — the usual leader. CeFi continues to be the least active in terms of the number of deals and capital inflows of all the different sectors.

The most active investors are more evenly distributing their investments across two or three different sectors, which changed from the patterns seen in 2021. This potentially shows a maturing of VC strategy; but still, these equal allocations are across DeFi, Web3, NFTs and infrastructure, with much less being invested in CeFi.

Active seed rounds, but expansion rounds see the most capital interest 

Pre-seed and seed rounds had the most VC activity at 288 individual deals with over $2.1 billion. Watching the development in these rounds is promising for the entire industry, as each startup brings new applications for the blockchain and new competition for previously formed organizations.

Expansion rounds did not see as much activity but recorded over 2.5x the capital inflows at almost $5.8 billion. These rounds help to encapsulate the overall growth potential and reach of the current blockchain projects, which most VCs are willing to pour money into as they are less risky than earlier stage investments, like Series A rounds.

Blockchain needs the right people

One issue intensified by all this capital investment is the need for people and talent in the blockchain space. As more companies have plans to expand, create new products and diversify their organizations, employees with the right skills are becoming harder to find. Cointelegraph Research recently interviewed Keychain Ventures and Dragonfly Capital. In that conversation, many topics were discussed, including the bottleneck of human capital, which will only get further strained as more investment pours into the industry.

Quarterly VC reports from Cointelegraph Research Terminal and Keychain Ventures

The report pulls from Cointelegraph Research Terminals’ expansive database along with analysis from Michael Tabone, an economist from Cointelegraph Research. Michael has an extensive background in economics, business, finance, cryptocurrency, blockchain technology and working with emerging technologies. Besides working for Cointelegraph Research, Michael is a Ph.D. candidate working on his dissertation, which is focused on the theory and application of DAOs.

Keychain Ventures is a crypto investment firm that engages in investing different funds in the blockchain space. Keychain Ventures, along with Cointelegraph Research, will be presenting quarterly interviews with VC firms as well as crypto/blockchain projects which have recently gone through a funding round. These interviews will open up different viewpoints of investment practices from all parties.

This article is for information purposes only and represents neither investment advice nor an investment analysis or an invitation to buy or sell financial instruments. Specifically, the document does not serve as a substitute for individual investment or other advice.