The crypto market has recently faced a lot of challenges. The market capitalization decreased by almost 17% and public sales activity has been quite weak. However, a detailed look reveals many positive signals in the evolution of the crypto market. Let’s take a deep dive into recent cryptocurrency fundraising activity for more insights.
Over the past few months, the crypto market has shown mediocre performance. However, early investment activity has proven to show a different result. Crypto startups have been raising record amounts of money, and new investment funds and companies have entered into competitions for ‘tasty’ crypto projects. This has resulted in an increase in the quality of projects and the emergence of new blockchain technologies.
April became a record month for raising money in the blockchain industry. Neither bad market conditions nor weak IDO/ICO/ICO activity in recent months impacted its success. Not only the total amount of transactions increased, but also the number of deals. Clearly, funds and companies are more willing to invest in blockchain startups.
The total value invested in crypto companies by financial institutions is over $60 billion (April contributed over 10% of this value), that’s slightly above 3.4% of the current market cap.
Web3 is the dominating fundraising market category over. Worth noting is the $2 billion Epic Games deal. Epic games is not a blockchain company but a game developer. However, details have revealed that this money is going to be used for the development of Metaverse and P2E blockchain games.
Speaking of metaverses, this category is currently one of the fastest growing. Some analysts believe that metaverse will become a full-scale entertainment in the future.
In addition, it is worth mentioning DAOs and the growth of their activity. DAOs are becoming quite a popular option not just as a cryptocurrency startup, but they are also proving to be attractive to a smaller-scale crypto investment funds.
Investments in blockchain infrastructure, Layer 1 and Layer 2 blockchains in particular, are worth a special mention. Since the beginning of 2020 L1 blockchains have fundraised over $2 billion, which will mostly be used on improvements and development of the ecosystem (in particular grants). In addition, over $500 million were invested in L2 projects.
Animoca Brands currently leads by the number of deals, indeed the fund is rapidly expanding its investment portfolio and, filling it with high-quality projects. The largest crypto funds, including Binance Labs, Andreessen Horowitz (a16z), Pantera Capital, DeFinance Capital, Delphi Digital, and others, also made a significant contribution in the development of blockchain this month. More traditional investment firms (such as SoftBank), which have stayed away from cryptocurrencies for a long time, are now not neglecting investments in the blockchain industry.
Angel investors are not far behind. In addition to regular angel investors in blockchain companies, well-known business coach Tony Robbins also made an investment in Boba Network as has with Crypto.com Capital, Huobi Ventures, Parachain Ventures and others.
The growing popularity of crypto has even allowed crypto companies to take part in fundraising rounds as investors in order to expand ecosystems and increase revenue. Dapper Labs took part in one of the biggest fundraising rounds of April, OneFootball. Polygon invested in DoubleJump.tokyo, and Solana Ventures invested in Cogni. There are also plenty of investments that were made by leading CEX platforms, such as Binance, Coinbase, FTX, KuCoin and others.
When considering IDO platforms we can see quite a different picture. While the activity here may not appear to be as good as private fundraising, some details do reveal a positive outlook on the market.
2021 was a year of IDO platforms. Crypto crowdfunding has become a new way for projects to raise money, and for investors to get exposure in a project at a very early stage. Unfortunately, 2022 does has not yet brought as much positivity to users of the platforms. There is a noticeable decrease in the number of IDOs, as well as a slight decrease in the average ROI.
Nevertheless, glancing deeper, we can see positive signals. The market is being cleared, there are fewer new low-quality projects, and the diversification is growing. Just like before, the most popular categories are Gaming and DeFi. But now we see more diversity: Web3 projects are appearing more often such as Metaverse and NFT.
Gaming projects made up more than half of the number of all IDOs in April. Play To Earn is still a very popular industry, and we have yet to see the culmination of the development of this industry. In addition, this category showed a relatively high ROI. Yet the highest profitability was shown by Move To Earn projects: Step.app (117x) and Run Together (11.6x).
DAO Maker can be confidently named as the most successful launchpad of the month. It accounted for over 23% of total IDO fundraising and launched the projects with the highest ROI. Despite weak IEO activity, exchanges brought decent profits to users compared to many IDO platforms overall.
Summarizing launchpads’ performance, IDO platforms are experiencing a transition from a disorderly crowdfunding market to a more organized process with high-quality projects. The current flat market limits the profitability of most projects as it largely depends on the pessimism of users. We expect that at the beginning of the next bull run, activity on IDO platforms will grow again, but with even better standards in terms of technology and project quality.
While the crypto market is in a continuous slow recession, important events are taking place that are having a strong impact on the formation of the blockchain industry. The market is being filled with new investors, both private and institutional.
So far such a high activity of venture capital has not affected the whole crypto market. Indeed, its share is quite small compared to the entire market. But we expect a continued growth in the flow of money into the blockchain industry and at the same time a return to a balance between fund investments and the overall state of the market.
An unnoticeable, but definitely important, event that occurred in April is the adoption of Bitcoin by the Central African Republic as a legal tender. Such a step may encourage other countries to ease the regulation of cryptocurrencies or even complete legalization. We can already observe with what speed many financial institutions (which in most countries are subject to increased regulation by the state) take part in the creation or investment in cryptocurrency startups.