Over the years, crypto companies have attracted massive amounts of funding from traditional, tech industry-focused venture capital startups.
Who can forget the massive $900 million raised by the once seemingly unstoppable FTX cryptocurrency exchange in a Series B round in July 2021? Back then, the world’s second-largest crypto exchange was the flavor of the month in Silicon Valley, with investors including Paradigm, Sequoia Capital, and SoftBank falling over themselves to get a piece of Sam Bankman-Fried’s $18 billion pie.
The second-largest crypto funding round on record was the $725 million Series B raised by Forte, the blockchain gaming platform, in November 2021. Sorare, the NFT marketplace, was not far behind with its blockbuster $680 million round, also a Series B, which closed in September of that year.
Readers could be forgiven for thinking that those VCs have wasted an incredible amount of money. As everyone knows, FTX’s investors were left with no choice but to write off their multi-million stakes in that crypto exchange following its stunning collapse in late 2022. Meanwhile, the silence of Forte and Sorare has been deafening. A quick search on Google reveals that Forte’s last major headline of note was in February 2022, with this rather unexciting story talking about how it had managed to secure a Money Transmitter License and BitLicense from the New York State Department of Financial Services.
Under the radar
But that kind of thinking belies the reality of the crypto industry, where it’s not uncommon for startups to spend several years under the radar, quietly focused on building their products away from the scrutiny of the highly critical crypto community and press.
Fact is, many crypto companies are making good progress, but they don’t always attract the attention they deserve in an industry that prefers to make a song and dance about mooning cryptocurrency tokens, Bitcoin bull runs and the latest multi-million dollar hacks and scams.
A good example of this is Space and Time, which represents a $20 million bet from prominent VCs, including Microsoft’s M12, Framework Ventures, HashKey Capital, SevenX Ventures, and Foresight Ventures. Space and Time is the creator of a decentralized, blockchain-based data warehouse platform, and it has had no end of updates to share since closing on its last funding round in September 2022.
One of its most notable partnerships was struck with OpenAI, the creator of the legendary chatbot ChatGPT, on a project to enable regular users to perform data analytics using natural language commands rather than the highly complex SQL programming language. Space and Time has also expanded its network, recently launching on the privacy-focused Layer-2 blockchain zKSync, while its relationship with Microsoft is also starting to bear fruit. Earlier this year, the company announced it was partnering with Microsoft Azure to launch a verifiable data indexer for developers to verify their AI training data.
Another crypto company that’s gone under the radar for some time is Filecoin, which is building a decentralized storage network as an alternative to traditional cloud-based storage offerings like Amazon Web Services. The company, whose backers include Sequoia Capital, made huge promises to disrupt the world of storage as long ago as 2017, when it raised a stunning $257 Million through one of the biggest ICOs in the crypto industry.
Clearly, Filecoin hasn’t managed to put the likes of Amazon out of business, but that doesn’t mean it isn’t going places, as a quick look at its lively blog page reveals. The company is quietly going from strength to strength, with recent posts including the creation of a public goods design and development team, regular updates on its network growth, and the launch of a new storage service called Curio Storage among its recent achievements. It’s the perfect example of a crypto company that’s slowly but surely growing its presence and increasing in importance.
We can also point to Immutable, the highly scalable gaming-focused Ethereum Layer-2 that raised over $200 million from high-profile backers like Temasek, Animoca Brands, Tencent, Coinbase Ventures, Veem, and Google Ventures. Immutable has since emerged as one of the leading lights in blockchain gaming, partnering with the likes of Ubisoft in an ongoing effort to build the next generation of more engaging, AAA-style Web3 games. It’s all part of a concerted push by Immuable to attract traditional gamers to the industry and establish blockchain as a standard for every video game.
It’s an ambitious goal, perhaps, but Immutable’s plans have so far proceeded without a hitch. Ultimately, if it succeeds, that $200 million investment by a host of Silicon Valley VCs back in March 2022 will look like one of the most astute bets they’ve ever made, such is the scale of the multi-billion dollar video gaming industry.
The bottom line
The crypto industry has attracted some significant funding from the traditional tech-focused VC giants, but such is the nature of the crypto industry that it’s too early to tell if those investments will succeed. But crypto is no different to any other segment of the tech industry in that, where some startups will inevitably fall by the wayside, many more will grow to become established giants that make their early investors very wealthy indeed.
With Web3 on the rise and the crypto industry back in vogue following Bitcoin’s gains earlier in the year, Silicon Valley’s VCs may not have long to wait before they start seeing their crypto-focused investments pay off.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
