Crypto projects raised $759M in the 3rd quarter of this year, nearly quadruple of the amount in Q2 when the uproar of the COVID-19 pandemic is in full swing.
It has been reported that crypto projects have raised $227M last September through 97 deals, $278M in August in 24 sales and $254M last July with 29 values. In comparison, in the 2nd quarter of this year, it has been found that crypto firms had risen $200M.
The rise of DeFi is the reason for the rise, or decentralized finance, non-custodial financial protocols that let a consumer lend out crypto or trade it on decentralized exchanges.
Last September, DeFi and Fintech deals made up for two-thirds of the total funding, or $157M. In August they made up 62% of deals and in July 72.4%. In the whole of 2020, they made up 40% of deals.
It was an improvement on the first half of 2020 when investment into crypto seemed like a reckless thing to do – the stock market has taken traders on a crazy ride.
Russian research team Grom says that crypto venture capitalists were half as likely to invest Series A funding rounds amidst this year’s pandemic compared to last year.
Grom found that the average amount invested in Series A funding rounds was $10.4M this year, in the first half of 2019, blockchain firms raised an average of $21M.
The research looked at 34 Series A investments sourced from publicly-available data. Private or undisclosed venture capital investments and back-alley crypto deals that are left out of the study, also the investments in later-stage startups like Series B or Series C funding rounds.
The reason for the sudden shift is apparent, “It’s because of the coronavirus,” says Bohdan Zapototskyi, Grom’s PR manager.
“It’s because of the restrictions that might have been placed on, moving capital, [particularly] in the US—the capital of capital.” As the global economy downfalls, “Investors are less willing to risk their money into risky investments,” he continued. And what is more dangerous than crypto?
But the researchers found more nuance to it. In the uncertainty, funding was more consistent this year. Last year, the spread between the most extensive and smallest transactions was $198.7M.
So far, the largest investment was the $200M Series A funding round for crypto exchange Bithumb.
This year, the spread was just $29.2M – the largest was $31.2M in Series A round for Lightnet.
Comparing to this summer, Outlier’s investment manager Ana-Maria Yanakieva wrote in her July update, “You may be laughing at the yield farming memes, but investors are seeing some real potential.”
Because of Yanakieva’s letter, it is now known that some of the projects blew up in flames. Yanakieva was right about one thing, the memes were funny.
No Comment