Home Blockchain Venture capital investments in blockchain startups skyrocketed 600% in 2021 to nearly $15 billion

Venture capital investments in blockchain startups skyrocketed 600% in 2021 to nearly $15 billion

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Venture capital investments in blockchain startups skyrocketed 600% in 2021 to nearly $15 billion

The growth of cryptocurrencies and block chain Technology in 2021 has also attracted significant investment into the sector as venture capitalists have continued to pour more money into the space.

In particular, in 2021, venture capital investment in blockchain technology soared over 600% to $14.8 billion, compared to $2.1 billion recorded in 2020, according to data from GlobalData. noted.

Venture capital activity was mainly concentrated in North America at $6.8 billion, followed by Latin America at $3.4 billion, while Europe ranked third with $3 billion. dollars. Elsewhere, Asia-Pacific venture capitalists invested $1.6 billion in the sector, while the Middle East had $0.44 billion.

Blockchain venture capital funding. Source: Global Data

Investments are climbing despite the embryonic stage of the blockchain

Investments in the blockchain industry surged in 2021 despite the industry being in its infancy. However, investors and consumers are looking to harness the benefits of technology as it integrates into enterprise IT solutions.

It should be mentioned that investments were mainly channeled into specific sectors with banking and payments in the lead.

“A sector that is investing heavily in blockchain technology in banking and payments. Blockchain helps the payments industry manage remittances, central bank digital currencies, and asset tokenization, but it’s still a new technology that needs to be fully tested before it can be fully adopted in the world. payments infrastructure,” said Chris Dinga, payments analyst. at Global Data.

According to the report, despite the significant investments in the sector, obstacles such as the lack of clear regulatory frameworks and insufficient qualified personnel prevent more players from getting involved.

However, the application of the technology is expected to skyrocket in the future under the leadership of central banks. Notably, more than 90 central banks are already planning to unveil central bank digital currencies (CBDC) which will be powered by blockchain technology.

Additionally, different established companies are taking the initiative to pump money into blockchain ventures as they bet on the growth of the technology. In this line, a precedent report reported that Google was ranked as the most blockchain-friendly publicly traded company with an investment of over $1.5 billion in the space. However, Google offered a clarification on its involvement in blockchain funding.

“As the report indicates, while the small number of blockchain-related companies we have invested in have raised $1.5 billion in total, we have only invested a small fraction ourselves. “said a Google spokesperson.

Impact of market volatility on venture capital funding

Interestingly, it will be worth watching how venture capital funding will be influenced in 2022 given that the crypto market has faced significant volatility. Market conditions have also forced some blockchain-powered companies to resort to readjusting their operations.

For example, crypto lending platforms, Celsius and Voyager Digital ceased operations with a bankruptcy filing. At a time, Coinbase crypto exchange was forced to implement a hiring freeze alongside layoffs.

Additionally, the actor was also impacted by the collapse of Terra (LUNA) ecosystem that has resulted in the loss of significant investments while being marred by allegations of fraud.

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