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Manbir Singh Marwah
Manbir Singh Marwah

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The Venture Capital Landscape in Blockchain & Crypto: A Thesis

Industry Overview

Blockchain and crypto as an industry is redefining how we organize and lead the economy, and creating a massive paradigm shift; accelerating us towards a digitized and decentralized future. The emergence of Bitcoin as the world’s first decentralized currency and the most sovereign asset, has led to the world experimenting with how we can introduce more transparent, immutable and censorship-resistant systems that are more robust and equitable on an individual-level, and not just for the centralized monopolies who’ve become powerful enough to own our data and digital identity over the internet.

According to CoinDesk Research, ​​2021 was an exceptional year for crypto assets as both retail and institutional investors piled into assets–both new and old–fueling the total cryptocurrency market capitalization to grow 185%, from $773 billion to $2.2 trillion.

  • Bitcoin ($BTC) and Ethereum ($ETH) continue to dominate the larger part of crypto market, with prices outperforming relative to traditional macroeconomic assets–BTC soaring over 2500% and ETH over 1700% within a timeframe of 5 years (source: CoinMarketCap charts).

According to a CoinDesk Report:

coindesk-report

  • The total market cap of cryptocurrency grew from under $100B in mid-2017 to over $2.5T in 2021 (source: CoinMarketCap charts).
  • According to a BCG report, the crypto market is expected to grow roughly five-fold by 2030.
  • There have been plenty of use cases around blockchain and crypto emerging over the past few years, including Decentralized Finance (DeFi; $50M+ TVL), NFTs (~$41B Market Cap in 2021) , gaming, DAOs and the metaverse.

β€œDeFi would represent the 31st largest US bank by total assets under management”

Peer-to-peer financial transactions, self-custodial wallets, staking pools, decentralized exchanges and aggregated market-makers have been significantly contributing towards the growth of DeFi.

a16z-defi

β€œThe NFT market remains hot, and we’re beginning to see mainstream adoption”

a16z-nft

β€œDAOs have accumulated over $10B in treasury assets under management”

a16z-dao

β€œInterest by people in the metaverse has exploded, with land sales totaling nearly $2B”

a16z-metaverse


Emerging + Noteworthy Startups

moonpay

Moonpay

Moonpay provides cryptocurrency sellers and exchanges (e.g. Binance, OpenSea and OKEX) with the technology required to allow everyday consumers to buy and sell cryptocurrency using traditional payment rails (known as On-Ramps and Off-Ramps).
Year founded: 2018
Location: Miami, FL
Funding: $642M (Series A)
Investors: Tiger Global and Coatue

chainalysis

Chainalysis

Chainalysis wants to bring some law and accountability to the wild west world of blockchain. The startup has developed an investigation, compliance and risk-management tool that helps solve crypto criminal cases. Chainalysis has managed to sell its tool to companies in over 60 countries.
Year founded: 2014
Location: New York, USA
Funding: $536.6M (Series F)
Investors: Accel, Blackstone, Dragoneer, Bank of New York Mellon and Emergence Capital

dapper

Dapper Labs

Dapper Labs is involved in both NFT production, NFT custody, and blockchain gaming. In particular, they’re the company behind high-profile NFT projects like CryptoKitties, NBA Top Shot and UFC Strike.
Year founded: 2017
Location: Vancouver, Canada
Funding: $607M (Series D)
Investors: Coatue, a16z, Google Ventures, Version One Ventures, BOND and GIC


Top Investors - VC Funds and Firms

grayscale

Grayscale

Established in 2013, Grayscale Investments has become one of the world’s largest digital currency asset managers. By April 2021, Grayscale’s net AUM totaled $45.1 billion. This digitally-native company is SEC-registered and operates within regulatory frameworks mandated by the SEC. It offers a diverse range of digital currency-based products.
Assets Under Management: Aave, Algorand, Bitcoin, Cardano, Chainlink, Cosmos, Ethereum, Polkadot, Polygon, Solana, Uniswap and more.

a16z

Andreessen Horowitz

Andreessen Horowitz is a private American venture capital firm, founded in 2009 by Marc Andreessen and Ben Horowitz. The company is headquartered in Menlo Park, California. Andreessen Horowitz invests in both early-stage start-ups and established growth companies, and has been on the forefront of crypto investments lately.
Assets Under Management: Maker, dYdX, Compound, Dfinity, Ava Labs and more.

multicoin

Multicoin Capital

Founded in May 2017, Multicoin Capital has since risen to become one of the top investment firms that focus on investing in cryptocurrencies, digital tokens, and blockchain companies. It is a crypto fund manager with a presence in three key locations: Austin, New York, and Beijing.
Assets Under Management: Arweave, Audius, Ethereum, FTX, Livepeer, The Graph and more.

*Other key players to watch: Paradigm, Pantera Capital, Coinbase Ventures, Bitwise, Galaxy Digital, ConsenSys Ventures, Alameda Research, Binance Labs and Draper VC.


Early Stage Company for Evaluation

coinme
5-year search growth: 528%
Year founded: 2014
Location: Seattle, WA
Latest funding round: January 5, 2022 | $19.1M (Series A)

Coinme was originally started as a network of Bitcoin ATMs made possible via partnerships with CoinStar and MoneyGram. Coinme recently launched an app that allows users to buy and sell cryptocurrency (including the option to pay via Mastercard and Visa). In the US, their ATMs can be found in 15,000+ locations nationwide.

Why Coinme?
One of the biggest barriers to crypto is still by far, mass adoption. Most of the people who are accustomed to the traditional banking and financial services, would prefer to buy crypto using a credit or a debit card. Coinme allows doing exactly that, with an option to purchase through their physical ATM - so it would work just like you would withdraw fiat from your bank account. If Coinme partners with self-custodial wallets like MetaMask, it would be a game changer as no central intermediary would be required for a user to purchase crypto through traditional ways of transacting, and having full control over their crypto. Not just that, Coinme can also act like a fiat on-ramp and off-ramp provider for such products, allowing self-custodial wallet users to purchase crypto using a debit card directly from their wallet, just like Wyre and Transak. Furthermore, Coinme supports Visa and Mastercard––two of the industry leaders that have been breaking into crypto lately, so they would also want to support the product.

Merits of investing:

  • Their vision supports mass adoption of crypto and banking the unbanked in a decentralized way
  • Coinme has partnered with MoneyGram and Coinstar, and has been featured in Forbes, CNBC, CoinDesk, Fortune and TechCrunch
  • Backed by Pantera Capital, MoneyGram, Blockchain.com and Digital Currency Group

Demerits of investing:

  • Coinme wallet is not self-custodial
  • Big alternatives exist, but not all offer ATM, Visa and Mastercard support

Disclaimer: This blog is meant for educational purposes only and nothing from this blog should be taken as a financial advice. Please DYOR before investing.

Top comments (1)

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Erin Bensinger

Hey, great article! I think it would also work really well in the Meta Punk Community:

Metapunk Web3 Community πŸ¦™

We’re a community where blockchain builders and makers, web3 devs, and nft creators can connect, learn and share πŸ¦™

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Meta Punk is a really cool international NFT and web3 community where artists, web3 developers, and traders can connect, learn, and share exciting discoveries and ideas. πŸ¦™

Plus, since Meta Punk is built on the same platform as DEV (Forem), you can fairly easily copy the Markdown and post it there as well.😊

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