What Are Crypto VCs Investing in? Binance Research

What Are Crypto VCs Investing in? Binance Research

The digital market space continues‌ to see deals and investments despite a downward trend ⁣in ⁢2023. ​Binance Research’s latest report⁤ shows that gaming and infrastructure projects‍ have contributed significantly to this sustained growth.

While traditional venture capital ‍(VC) share has risen to 45% this year, the ⁤gap between traditional ‌and Web3 investors⁤ has been closing gradually.

Investors Flock to Gaming​ Industry

Funding in the digital market‍ reached its peak in ⁤April‌ 2022‌ with ⁤$6.8 billion, but experienced a decline in the third quarter due to the FTX⁢ contagion. However, funding levels have stabilized, and⁤ the Infrastructure and Gaming sectors have shown growth in January and February 2023.

Gaming‍ projects have received the highest ‍funding in the last four quarters with 87 deals. However, the⁤ average investment per deal in gaming⁣ is relatively low at $7.42 million, indicating ⁤investors’ cautious ‌approach towards the nascent ⁤Web3 gaming industry.

“The sustained investment from venture capitalists‍ in​ the gaming industry signals a strong forecast for its expansion, ​accompanied by a rise in funding for AI⁣ and Data in recent quarters. Q3’23 saw a shift towards four ​main areas of interest, including DEX.”

Coinbase Ventures Leads ⁣as Non-Lead Investor

Notable VC firms ⁣like Pantera Capital, Dragonfly, Coinbase Ventures, ‌a16z, and Polychain Capital ‌frequently engage in co-investments, ⁢with Polychain Capital and Coinbase Ventures leading in joint investments. Coinbase Ventures, in particular, allocates a significant portion of its investments ‍to DeFi and infrastructure​ projects.

Despite a slight decrease in the number of unique investors, Coinbase Ventures remains‍ a top investor ⁣and diversifies its‌ portfolio by making smaller investments across a wider range of projects.

As the ‍cryptocurrency industry continues to ‍mature,⁢ venture capital​ firms (VCs) are playing a crucial role in supporting innovation and growth. These firms provide⁢ funding to promising blockchain projects, ⁤nurturing them into successful ventures. Binance Research, ​the market analysis and research arm of ‍Binance, ‌one‌ of the leading cryptocurrency exchanges, has conducted a comprehensive study on the‍ investments made by crypto VCs. In ⁣this article, we⁤ will‍ delve into the valuable insights provided⁣ by Binance Research, shedding light on where⁣ these VCs‍ are investing ‍and what sectors and projects are gaining traction.

Top Sectors:

1. Infrastructure and ​Development Platforms:

– Blockchain infrastructure such as scalable networks and‌ development platforms ​receive significant attention ‍from VCs.

⁣ -​ Projects like Ethereum, Polkadot, and Cosmos are attracting substantial investments due⁣ to their ​potential to revolutionize blockchain technology.

2. Decentralized Finance (DeFi):

⁤- DeFi has emerged as one of the hottest​ sectors in ⁢the cryptocurrency space, ‍aiming to revolutionize ​traditional financial ​services.

– VCs are‌ investing heavily in ‍DeFi projects, including lending ⁢platforms, decentralized exchanges, and yield farming protocols such ‍as ​Compound⁣ and Aave.

3. Gaming and Non-Fungible Tokens⁣ (NFTs):

‍ – The gaming industry is witnessing a wave of innovation ⁢leveraging ​blockchain technologies.

​ – Crypto‌ VCs are funding‌ projects creating blockchain-based ‍games and non-fungible tokens (NFTs), with the potential to transform ‌the gaming and collectibles markets.

4. Internet of Things (IoT) and Supply Chain:

– Connecting physical devices to the blockchain, IoT projects ‌are gaining‍ attention from‌ VCs.

​ – Supply chain solutions that leverage‌ blockchain technology‍ for enhanced traceability and transparency are ⁤also ⁢attractive ‍to investors.

Notable Investments:

1. Filecoin:

– Raised over $205 million in a‍ token⁣ sale during its initial coin offering ‌(ICO).

– Filecoin‍ aims to create a decentralized network for storing ⁤and retrieving files, incentivizing users to participate in the network through token rewards.

2. Chainlink:

– Successfully raised over $30 million in its token sale.

⁣- Chainlink provides decentralized oracle services, bridging real-world data with smart contracts on ⁣the blockchain.

3. ⁤Polkadot:

– Notable for its successful ⁢parachain ⁢auctions, raising millions of dollars.

– Polkadot aims to‍ create a multi-chain network, allowing ⁢different blockchains to interoperate with each other.

Geographical Distribution:

1. United States:

⁤ – The United States remains the leading hub for crypto VC investments, accounting for a significant portion of total funding.

– Silicon‌ Valley and New York City are prominent locations attracting⁢ blockchain startups and ‍VCs.

2. Asia-Pacific (APAC) Region:

– The APAC region, particularly China and Singapore, ‌emerges as a strong​ contender for crypto VC⁣ investments.

– Singapore’s favorable regulatory environment and ⁢China’s‌ growing ‍blockchain ecosystem‌ have⁣ attracted substantial funding.

Case⁢ Studies:

1. Uniswap:

– Initially funded by a⁢ crypto VC, Uniswap has become one of ​the leading decentralized exchanges (DEX) ⁢in the market.

– The project raised $11 million in a seed funding round, facilitating its development and growth.

2. Terra:

– Backed by well-known VCs ⁤like⁤ Pantera ‍Capital and Arrington XRP Capital, Terra has gained ⁤significant attention.

– Terra aims to ⁢create a stablecoin ecosystem and improve the scalability‍ of⁤ blockchain networks.

First-hand Experience:

1. XYZ Capital:

– XYZ Capital, a prominent crypto VC, has been actively investing in DeFi projects, recognizing the⁢ sector’s potential for disrupting traditional finance.

– The fund ‍believes that crypto VCs ​play a vital role in filtering ⁤and supporting innovative ⁤projects, ensuring their ⁤success within ⁢the crypto ecosystem.

Benefits and Practical Tips for Investors:

1. Diversify Investments:

– Diversification can help ​mitigate risks and maximize potential returns.

– Investing in a range of sectors and projects ‍can provide exposure to different opportunities within the crypto industry.

2. Conduct Thorough Due Diligence:

– Extensive research and due diligence are crucial‍ before investing in any project.

-​ Evaluating the team, technology, market potential, and competitive landscape can significantly impact investment⁣ decisions.


Crypto venture capital plays a pivotal role in fueling innovation and driving⁢ the growth of the broader cryptocurrency ‌ecosystem. Binance ​Research’s ​insights reveal the⁤ sectors, projects, and geographical ​locations capturing the attention of ​crypto VCs. By staying informed about these trends, investors⁣ can make more informed decisions, enriching their understanding and participation‌ in the evolving world of cryptocurrencies⁣ and blockchain technology.

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