Venture capital firms invested over $33billion in crypto startups in 2021 (according to Galaxy Digital). A huge percent of this capital was raised for companies focused on building in Web3.
Among the capital invested, some huge contributions were Andreessen Horowitz’s $2.2 billion fund, Paradigm’s $2.5 billion fund, and Hivemind Capital Partners’ $1.5 billion fund.
This year, we’ve seen crypto projects complete rounds of $550 million (Fireblocks), $450 million (Polygon), $400 million (FTX), etc and it’s not half of the year yet.
In this article, we’ll analyze the top 6 venture capital firms that have invested the most in Web3 projects this year. But first…
What Makes Web3 Trendy In Venture Capital Focus In 2022?
Blockchain is gradually moving from the Web 2.0 phase to the Web 3.0 stage. The limits of Web 2.0 have presented an opportunity for the dynamic blockchain ecosystem.
Web 2.0 is the “writable” phase of the web, where users can interact, socially connect, and share user-generated content.
Web 3.0, on the other hand, is the “executable” phase of the web. Web3 is a complete change from Web 2, it allows users to interact with the web in 3D.
The core concepts of Web3 are decentralization, openness, and greater user utility. The idea is to build a team of computers that can interpret information like humans and create personalized content for users.
The two most popular use cases of Web3 are Play-to-earn(Gamefi) and Move-to-earn(M2E). What many like about these two is that it makes blockchain adoption easy.
It’s easier to learn to use the blockchain through gaming or exercising than it is with other Web2 features.
Top Venture Capital Firms Taking The Lead In Investing in Web3
Here’s a list of six venture capital firms that are leading the investments in Web3 projects:
Coinbase Ventures: This is the investment arm of Coinbase and it invests in early-stage cryptocurrency and blockchain startups. It was founded in 2018.
The venture capital firm has invested in emerging web3 projects like Arbitrum, Optimism, Biconomy, Arweave, Orca, LayerZero, etc.
According to Coinbase statistics, they have $223 billion in assets under management.
Pear Vc: Founded by Mar Hershenson and Pejman Nozad in 2013, the venture capital firm has a total valuation of $100 billion.
It has investments in web3 projects like SuperDao, Paysail, Burst, etc.
Sequoia Capital: This venture capital firm has over $80 billion in assets under management according to Pitchbook and has notable investments in top projects like Polygon, Faraway Games, Filecoin, etc.
The unrelenting venture capital firm was founded in 1972 (50 years ago) by the late Don Valentine.
A16z: Full name, Andreessen Horowitz. It is a venture capital firm that invests in crypto and Web3 startups. It has invested in projects like Avalanche, Opensea, Maker Dao, Dapper Labs, etc.
The private venture capital firm was founded by Marc Andreessen and Ben Horowitz in 2009. Reports say that a16z has over $28.2 billion in assets under management.
3AC: Three Arrows Capital is a top hedge fund and market maker that provides risk-adjusted returns. It was founded in 2012 by Su Zhu and Kyle Davies.
The firm has over $20 billion in assets under management and has investments in Gamefi projects like Axie Infinity, Aave, and Web3 platforms like Polkadot, Kusama, etc.
Paradigm: This firm focuses on supporting crypto and web3 companies and protocols with as little as $1million to $100million. They have invested in projects like Arenax Labs, Blur, Fractal, and Phantom.
The investment firm was founded by Coinbase Inc cofounder, Fred Ehrsam and former Sequoia Capital partner, Matt Huang in 2018. The firm is estimated to have over $2.5 billion in assets under management.
Last year, Twitter’s former CEO and founder of Block, Jack Dorsey, tweeted ‘You don’t own Web3, the Venture Capitalists…do‘. I think it’s safe to say that this is not entirely true.
To drive Web3 adoption by building use cases, Venture capitalist funding is needed. However, the entire purpose of web3 is ownership, to allow users to own their data and this cannot be erased without changing the core of the technology.
Therefore, the balance between venture capitalists and community sentiment must be preserved.