From January through August, venture capital crypto firms raised over $2,2 billion to invest in startups

What’s new? From January through August, venture capital firms raised over $2,2 billion for closed-end funds to invest in cryptocurrency startups. According to PitchBook analysts, more than $500 million has been raised in the last few weeks alone.

Material by The Block

What else is known? For example, in late August, ParaFi Capital launched a $120 million fund to buy stakes in other crypto funds focused on specific market segments, strategies, or regions. The company plans to build a portfolio of stakes in 30-50 crypto funds over the next five years.

Another example is Borderless Capital, which in mid-September launched a $100 million fund focused on decentralized physical infrastructure networks (DePINs).

Hack VC raised $77 million in September for its third blockchain fund, which will focus on early-stage projects. Robot Ventures launched its fourth crypto fund in August for $75 million, which will also focus on young projects.

Dragonfly Capital plans to launch a $500 million fund and, according to media reports, has already raised half of the required amount.

Many funds target early-stage startups, indicating that venture capitalists are optimistic about the potential of new technologies. Borderless Capital with its focus on DePIN projects stands out here. The company has launched a total of three such funds, the first two in 2021.

The first $10 million fund was focused exclusively on the Helium project with the HNT native token. The second $20 million fund supported 35 DePIN projects. Along with the growth of the sector over the years, the volume of funds in the company’s third fund has also grown.

Borderless Capital partner Alvaro Gracia believes that the sector is the most resistant to bear markets and has no correlation to the broader crypto sector.

DePIN projects provide tokens to users for participating in or managing devices that form a decentralized network of physical infrastructure. For example, Helium pays coins for managing telecommunications networks such as communication towers, Hivemapper rewards users for taking road surveys that are then used for mapping, and Render allows users to rent out their GPU power to create graphics.

According to analyst Colin Wu, there were 110 venture capital funding rounds for crypto startups in August. The number fell 1% for the month but rose 41% for the year.

A total of $785 million was raised, down 22% from July but up 20% year-to-date to 2023. The largest number of rounds were in the DeFi (26), Web 3.0 (23), AI (15), and NFT/gaming (13) sectors.