With the collapse of bad CeFi actors in the crypto space and against a backdrop of higher for longer interest rates, it is tempting to suggest that crypto funding has fallen out of favour with VCs.
Yes, the rate of flow of VC capital has slowed in 2023 and VCs have become more discerning. However, 2022 was still a year that saw unprecedented flows of VC funding into crypto projects and this has not abated even in 2023.
We will examine how these 10 promising crypto projects have defied the ongoing bear market and raised unprecedented amounts of funding from top VCs! How did they prove their worth?
Also Read: 5 Narratives To Pay Attention To in 2023
1. Yuga Labs: USD 450M Funding Round
Although the NFT market peaked in 2021, many VCs are still bullish on the sustained growth and demand for digital collectibles.
On 22 March, the creators of Bored Ape Yacht Club (BAYC) Yuga Labs closed one of the largest funding rounds, at USD 450M, led by Andreessen Horowitz (a16z) and Animoca Brands among others.
The team at Yuga Labs have also created other notable projects such as Otherside, and have acquired the rights to fellow NFT project Crypto Punks.
More recently, even global luxury fashion brand Gucci recently established a partnership with the Bored Ape Yacht Club creator.
2. Polygon (MATIC): USD 450M Funding Round
Polygon’s USD 450M funding round that concluded on 7 Feb 2022 to expand its scaling solutions to eventually cater to the mainstream adoption of Web 3 applications attracted the likes of Sequoia Capital India and Galaxy Digital.
L2 scaling solutions still have a promising future, hundreds of real-world businesses such as global bank JPMorgan are already building on Polygon!
Time and again, Polygon has proven that it is committed to creating a real-world tangible impact globally.
3. Secret Network: USD 400M Funding Round
On 20 Jan 2022, privacy-centric Secret Network raised a total of USD 400M in funding which consisted of a USD 225M ecosystem fund and a USD 175M accelerator pool.
Notable investors include DeFiance Capital, CoinFund, Hashkey and many more!
The USD 225M ecosystem fund was to be deployed to expand the project’s application layer, network infrastructure and tooling.
The USD 175M accelerator pool, on the other hand, was to provide non-dilutive early stage funding for new projects building on Secret Network.
Secret Network seeks to strike the delicate balance between transparency and privacy and it is indeed unique in how it tries to achieve this.
The underlying ledger of the Secret Network is publicly visible. However, the smart contracts are private by default.
4. Near Protocol: USD 350M Funding Round
Tiger Global led a USD 350M funding round for Near Protocol in Apr 2022, with participation from Republic Capital and Dragonfly Capital among others.
According to this Blockworks article, there was in fact a MOVE VC Fund that invests exclusively into new projects within the NEAR ecosystem.
It does seem like VCs do have great faith in this L1’s nightshade technology that gives it a technical advantage over its peers.
5. Acala Network: USD 250M Ecosystem Fund Raise
According to a 23 March announcement from Acala, a USD 250M ecosystem fund was launched to support early stage startups working on Polkadot and Kusama-based dApps which supported Acala’s aUSD stablecoin.
Any dApp or early-stage parachain that was building on Polkadot or Kusama and drove the growth and utility of aUSD could apply for grants of up to USD 50K. Projects that seeked larger grants were subject to more in-depth evaluation.
This ecosystem fund raise was made possible through the collective support from Polkadot’s top nine parachains and leading VCs such as Digital Finance Group and LongHash Ventures.
6. The Graph: USD 205 Ecosystem Fund Raise
A group of 6 top VCs led by Digital Currency Group (DCG) and Multicoin Capital co-funded a USD 205M ecosystem fund for The Graph, a leading indexing layer for Web 3 and blockchain data.
These VCs are still extremely bullish on dApps that sought to unify the digital and real-world technologies.
The funds raised went towards supporting projects across multiple sectors that were building with The Graph’s querying technology.
7. zkSync: USD 200M Series C Funding Round
Unfazed by the ongoing bear market, Blockchain Capital and Dragonfly Capital co-led the USD 200M Series C funding round for user-centric ZK rollup platform zkSync.
Besides Matter Labs, the team behind zkSync, crypto VCs remain optimistic on ZK rollup based scaling solutions.
For zkSync in particular, many projects in DeFi have indicated their intent to integrate with zkSync and they had an impressive list of 150 launch partners.
8. Aptos Labs: USD 200M Strategic Funding Round
Crypto VCs can’t get enough of new and upcoming L1s!
According to this TechCrunch report, the confidence that VCs have in Aptos can be attributed to its ability to attract developers and confidence in its use of the Move programming language that was developed by Meta.
9. Berachain: USD 42M Private Round Raise
Led by Polychain Capital, L1 Berachain has successfully closed a USD 42M private funding round.
Built on the Cosmos SDK, Berachain is an EVM-compatible L1 with a Proof of liquidity (POL) consensus mechanism and a tri-token system: BERA, HONEY and BGT tokens!
The POL consensus mechanism enables users to stake their assets on Berachain and concurrently use the same assets to trade, borrow or lend on-chain.
10. Monad Labs: USD 19M Seed Round Raise
Along with 70 other VCs and angel investors, Dragonfly Capital led the USD 19M seed funding round for another L1.
Monad Labs seeks to revamp the EVM execution system from scratch with the Monad blockchain, to allow non-overlapping transactions as well as the blockchain’s execution and consensus layer to run in parallel.
This is expected to radically improve the speed, transparency, security and scalability of this L1.
Closing Thoughts
As a result of the contagion risk posed by the FTX debacle and challenging macroeconomic conditions, many VCs have exercised greater caution when making further investments in the current bear market.
However, crypto VC funding remains resilient and this group of investors with a relatively larger risk appetite recognize that crypto is here to stay.
These VC investors remain undeterred and continue to pour significant sums of funding into projects with immense long-term potential.
The projects with solid fundamentals that seek breakthroughs in transformative technology and those with razor-sharp focus on bringing real world assets on-chain will still be on the radar of VCs seeking the next 100X investment.
Also Read: Polygon’s zk IDs: The Solution To a Web3 Identity?
“[Editor’s Note: This article does not represent financial advice. Please do your research before investing.]
Featured Image Credit: ChainDebrief
This article was written by Clarence Lee and edited by Yusoff Kim