Although the performance of the Crypto market in the third quarter was not stable, overseas VCs are still stepping up their investment in this field.

As of the third quarter of this year, overseas venture capital firms have invested more than US$17.8 billion in the Crypto field. According to TheBlock's research data, this value is more than the sum of the investment amount in the previous 6 years. You must know that the financing amount of the blockchain industry in 2020 is only 3.8 billion US dollars.

Looking at the data in the third quarter alone, there were 423 financings in the Crypto field, with a total financing of approximately US$8 billion. This figure has set a record high for quarterly investment scale.

It can be seen that there is a clear trend in the investment directions favored by Crypto overseas venture capital companies. The NFT and game vertical industries surpassed DeFi in the third quarter and became the most favored track by investment institutions.

In addition, the scale of financing obtained in the Crypto field in India and Africa is increasing, which may bring new enlightenment to the market.

Frequent investment of big money in the star track

According to the public data, the industry has also ushered in the trend of giant institutions increasing their investment. Overseas VCs have a strong interest in NFT, games, Crypto payment and other fields.

Among the US$8 billion investment in the third quarter, Bitclout, Truelayer, Ripio, Sky Mavis, etc.’s financing of hundreds of millions of US dollars impressed the market, and the trend of huge institutional investment in the overseas Crypto market became more and more obvious. After these institutional funds enter the primary market on a large scale, their investment scale is larger and the investment cycle is longer, which is equivalent to the emergence of multiple "giant whales" in the market.

In terms of the number of investments, the most active investment institution in the third quarter was Coinbase Ventures, which participated in more than 18 investments. Animoca Brands, Polychain Capital, a16z, etc. followed.

In terms of direction, the popularity of the star track continues.Data show that in the first three quarters of 2021, the total financing of blockchain NFT and game private companies reached 1.8 billion US dollars, and the financing in the third quarter alone exceeded 1 billion US dollars. Among them, on the NFT and game track, the two largest financing transactions came from sports technology startup Sorare and blockchain game development Dapper Labs. Sorare received US$680 million in Series B financing at the end of September, with a post-investment valuation of US$4.3 billion; blockchain game development Dapper Labs received US$250 million in financing, and the company’s valuation has reached US$7.6 billion. He is the creator of star NFT projects such as NBA Top Shot and Crypto Kitties, and is in the head position in the industry.

From the perspective of thinking, SoftBank Group has increased its investment in the Crypto field in 2021, which has become a typical case.In the last quarter, SoftBank bet on NFT, games, and transaction payments:In the field of NFT, Japan’s SoftBank Group led the investment of US$680 million in Sorare, and the investment objects on the same track also include Fanatics, Blin Metaverse, Juggernaut, DNABlock, etc.; in the field of payment, the investment involves Chime, oPay, TBCASoft, DriveWealth, Paystand, etc. In the field of trading platforms, investment involves FTX, Bullish, Mercado Bitcoin, Revolut, Hashdex, etc., and there is a clear investment preference.

The investment behavior of these overseas active institutions shows that the ecosystems such as NFT and GameFi are still growing, and the investment and financing of the same track are still active in October. According to the information of the financing statistics platform Dovemetrics, the recent Crypto financing since October is still almost All revolve around the three directions of NFT, DeFi, and payment.

Active investment in India, Africa and other regions

On the other hand, in the third quarter of the year, there was a clear preference for investment regions in the Crypto field, and the enthusiasm from India and Africa has picked up.

India's Crypto and blockchain industries continue to be favored by overseas venture capital. According to a report released by India’s local private investment analysis platform Vccedge in the third quarter, as of August this year, India’s Crypto and blockchain industry has reached 16 transactions through overseas venture capital companies, with a total amount of more than 627 million US dollars. 14.25 times that of last year. In the last year, the total amount of the industry was only 44 million US dollars.

It is noteworthy that the Indian Crypto currency exchange CoinDCX’s financing of US$90 million in August has almost become a landmark event. The financing includes Capital Ground, Block.one, Polychain, Coinbase Ventures and many other top Crypto institutions.

The soaring investment scale may be related to changes in the country's market environment in the Crypto field. Although the Indian government has long held a negative attitude towards the use of Crypto currencies, the country has abandoned its previous related bans. In the third quarter of this year, the country is proposing a series of related proposals to classify Crypto currencies as alternative assets or commodities for regulation, and it is possible to classify digital currencies based on some cases.

Looking at October, CoinSwitch in India completed its C round of financing of US$260 million, and its valuation rose to US$1.9 billion. This is also the first investment in India by the leading organization a16z, which is of far-reaching significance. In addition, it also attracted Coinbase Ventures, Tiger Global, Sequoia Capital India. After that, CoinSwitch became the second Indian Crypto unicorn.

In addition, Galaxy Digital, Solana Capital, etc. participated in the Indian short video social platform Chingari, and began to deploy in the directions of Indian short video, blockchain social, and NFT creation.

According to media comments, against the background of institutional investment and rising enthusiasm for DeFi activities, India has the sixth largest economy in the world, and the proportion of young people in the total population is very high. Once the Indian government makes a clear policy, this region may become a key area for the development of Crypto in Central Asia, South Asia and Oceania.

The region that also received good expectations from large venture capital institutions is the African continent.

A few months ago, in many overseas media reports, the term "Crypto revolution" was used for the development of the African Crypto market this year. The number of venture capital-funded start-ups in the sector in Africa has grown by 1,950% since 2016, according to media data.

Most opinions attribute this phenomenon to "the high cost of remittances between African countries" and "the devaluation of legal tender". What is certain in the market at present is that the influence of Crypto is expanding on the African continent.

In fact, African Crypto start-ups in 2020 have already attracted a lot of attention. According to public data, these companies have received more than $650 million in investment funds. This trend will become more explosive in 2021. According to incomplete statistics, in the past year since last July, the African Crypto market has reached a digital currency volume of 105.6 billion US dollars, an increase of more than 1200%.

Compared with India, whose policy is still uncertain, the policy environment in many regions of the African continent is relatively friendly, and the regional government is also committed to implementing KYC reviews to meet relevant standards in the financial field and provide a relatively stable market environment.

Another data worth paying attention to is the local adoption rate of digital currency. The adoption rate of digital currency in Kenya, South Africa, Nigeria and Tanzania is increasing, and the trend is obvious. These transactions are dominated by a large number of small transfers, with the share of small transfers (less than $10,000) accounting for 7%, which is higher than the global average of 5.5%.

The data of the data statistics platform Usefultulips also proves this point. In August this year, the trading volume of Bitcoin in sub-Saharan African countries rose sharply. The trading volume of Bitcoin P2P was close to 17 million US dollars at that time, surpassing North America and ranking No. 1 in the world. 1, while the Asia-Pacific region ranked third.

Taking Nigeria as an example, Usefultulips shows the BTC transaction volume of major countries in the African region in the past year. Among them, Nigeria leads other regions with a BTC transaction volume of 284 million US dollars. Moreover, the true scale of digital currencies flowing through the African economy is likely to be much larger, as many transactions are currently difficult to track by analytics platforms.

In addition, the Central Bank of Nigeria is currently pushing hard for the country’s digital currency eNaira, a digitized version of its fiat currency, urging its people to accept this central bank digital currency in the past few days.

On the investment track, due to the significant growth in investment in African blockchain and financial payment start-ups, the blockchain payment and financial technology fields are popular directions. According to a recent study by Disrupt Africa, the number of fintech start-ups on the continent will increase to 576 in 2021, a 17.3% increase from 2019 and a 90% increase from 2017.

Behind these clear investment directions, it can be seen that the blockchain and Crypto VCs in the third quarter were still active. In the current market, whether it is DeFi, lending, NFT or GameFi, the number of all new applications is exceeding the number of previous years. The high-profile entry of large institutional funds will make the proportion of funds more focused on "construction" rather than purely It is expected to support the longer-term market development, and we always look forward to the development of the industry to bring more significance and far-reaching influence.