Venture capital firms are still pouring funding into crypto and Web3 projects, and the rate at which they are doing so has increased from the same time last year, despite the bear market.
According to the Wu Blockchain monthly VC funding report, the total amount venture firms invested in Web3 startups in June was $3.67 billion.
The figure has fallen by 18% from the $4.45 billion invested in May, but surprisingly it is up 60% from June 2021’s $2.3 billion.
The research, citing Dove Metrics, reported that there were 191 open investment projects for crypto venture firms last month. This has fallen 15% from the 225 open rounds in May, but is up 42% from June 2021’s figure of 134 investment rounds.
CeFi liquidation protection
The high figures may be skewed somewhat, as there were several high-profile funding and loan rounds for firms seeking to protect themselves against liquidation and bankruptcy. Wu Blockchain noted that centralized finance (CeFi) firms raised the most for the period:
“CeFi raised the most because of the number of institutions that raised debt to avoid liquidation.”
Two of the largest CeFi raises were from Sam Bankman-Fried’s FTX and Alameda, who loaned BlockFi $250 million and Voyager Digital $200 million. This has sparked debate over how much of the industry Bankman-Fried now controls.
The two largest DeFi raises were the Capricorn stablecoin lending project and the Unizen exchange running on the Binance blockchain. Both secured funding rounds of $200 million apiece.
Solana-based non-fungible token (NFT) marketplace Magic Eden also made the list with a $130 million Series B in June. There were several other notable investments for the month including an enterprise blockchain solution for verifying carbon certificates, EcoWatt, and crypto infrastructure projects Prime Trust, Astra Protocol, and Kushki.
Last week, venture capital firm focused on backing the future of Web3, Reciprocal Ventures, doubled down on the sector with the close of an oversubscribed $68.5 million second fund.
Crypto bear market deepens
Venture capital firms are seldom concerned about short-term market cycles and generally seek longer-term investments.
There does not appear to be any end in sight in the short term with this bear market. Crypto assets have consolidated over the weekend with very little movement in either direction. As a result, the total market cap was hovering just over $900 billion during the Monday morning Asian trading session.
Bitcoin and Ethereum were both trading below previous cycle peaks at $19,146 and $1,057 respectively at the time of writing.
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