In the grip of another harsh crypto winter, it’s easy to lose sight of the big picture. Bitcoin and Ether keep going down and crypto critics talk constantly about how everything has gone wrong and warn that prices will never recover.
But many VC firms and investors are undeterred and still see the huge opportunities currently being presented by the internet’s transformation from Web2 to Web3. They know that short term price fluctuations mean nothing when compared to the inevitable Web3 takeover that’s coming over the next decade. And they continue to invest, despite the crypto doom and gloom being spouted by the frightened masses. These guys are the true Blocksters.
The following four VC investment firms have collectively raised over $10 billion to invest in Web3 startups.
Last month the legendary Silicon Valley VC firm Andreesen Horowitz (A16Z) announced its fourth crypto fund had raised $4.5 billion, bringing their total raised to $7.6 billion dedicated to web3 and crypto investments. Chris Dixon, general partner of A16Z, said we’re in a “golden era” for web3 and crypto and that he’s never been more confident about the sector. He also said:
“We are excited about developments in web3 games, DeFi, decentralized social media, self-sovereign identity, layer 1 and layer 2 infrastructure, bridges, DAOs & governance, NFT communities, privacy, creator monetization, regenerative finance, new applications of ZK proofs, decentralized content & story creation, and many other areas.“
A16Z also recently announced their $600 million gaming fund, Games Fund One. They believe that games infrastructure and technologies are a particularly valuable investment because long term they are also the building blocks of the metaverse, an opportunity which dwarfs the current $300 billion gaming industry.
Among the latest crypto bets made by A16Z is in WeWork founder Adam Neumann’s new Flowcarbon startup, which sells tokenized carbon credits on the blockchain. Earlier this week Flowcarbon revealed it had raised a funding round of over $70m, led by a $32m investment by A16Z Crypto.
BITKRAFT Ventures is an early-stage investment platform for gaming, Web3 and interactive media. They believe that the internet is going through an irreversible transformation from Web2 to Web3 and they see big opportunities in the infrastructure layer of Web3. Web3 internet requires entirely new infrastructure needs other than the centralized servers of big tech, so they currently focus on Web3 investment opportunities around storage and computing.
Storage. One of Web3’s main goals is to move away from centralized servers onto decentralized protocols. But current blockchains like Ethereum can only store a relatively small amount of data in a truly decentralized way. The explosion in popularity of NFTs means massive amounts of NFT Metadata must now be stored on-chain. And when streaming goes Web3 there will be massive amounts of video data that must also be stored on-chain. Bitkraft is backing companies who offer on-demand or long term Web3 storage solutions, such as Spruce, which allows users to own and control their own data.
Computing. Massive computing power is required to run the web. On the current Web2 that is provided by the tech giants. On Web3 the computing power will be provided by the internet users themselves.
Video transcoding is a major consumer of computing power, with 82% of internet bandwidth being used for video in 2022. Web3 solutions like Livepeer have the potential to provide scalable computing power to streaming platforms and broadcasters at a fraction of the costs of centralized servers. The computing power is provided by internet users’ spare computer power and they earn crypto by doing so, creating millions more crypto users.
Binance recently raised $500 million to launch its own venture capital fund, called Binance Labs, dedicated to Web3 investments. CZ said earlier this year that Binance had billions to invest in Web3. The company’s venture arm said it had secured backing from partners at DST Global and Breyer Capital as well as unnamed family offices and corporations.
Paradigm, the crypto venture capital firm that closed a $2.5 billion fund last year, continues to actively invest in Web3 companies.
In the past month, the VC firm announced deals backing DAO management platforms Utopia and Dework, Lightning Network-focussed builders, Lightspark, and made its first investment in Africa by leading the $30M Series A of prospective Web3 ‘super-app’ Jambo.