Who are the Best Crypto Venture Capital Firms?
Before starting to discuss the top crypto venture capital firms, I think it is best to clarify what venture capital is and how it works and used in the crypto universe.
What is Venture Capital?
To put it simply, Venture Capital (VC) is a private equity/fund that is provided to a startup company by big firms to gain a larger return. Because of the high potential growth of crypto startup companies, Venture Capital Firms (VCs) usually invest early to maximize their profits.
Even though it is money that VCs usually provide, venture capital could also be in the form of technical and managerial expertise. VCs can further help with the marketing, public relation and navigating the legal and regulatory obstacles as well.
Stages of Investment in Venture Capital
Stages of Investment in Venture Capital
Stage 1 - Pre-Seed: This is the earliest stage for investment and the startup company is usually just an idea.
Stage 2 - Seed Round: This is the stage where investments occurs as the company is on its testing phase. The roadmap of the company is pretty much established at this stage which helps investors evaluate the company properly.
Stage 3 - Series A: The company has proved itself at this stage, with a solid product and community behind it. Although the risk of investment is low at this stage, share prices wont be cheap.
Stage 4 - Series B: At this stage the company has a huge user-base and any investments are used in expanding the company.
Stage 5 - Series C: Investments at this stage are involved in taking the company international or to help the company diversify.
Best Crypto Venture Capital Firms
Andreesen Horowitz (A16z)
Andreesen Horowitz, also known as A16z Crypto is an American crypto venture capital firm launched in 2012 by Marc Andreesen and Ben Horowitz. The firm invests in companies which are in different stages, starting from Pre-seed to Series C.
Andreesen Horowitz (a16z) has $35 billion in assets under management across multiple funds. The firm managed to successfully invest in hundreds of crypto companies such as OpenSea, Dapper Labs, and Axie Infinity, Near Protocol, and Uniswap.
Coinbase Ventures
Coinbase, the well known crypto exchange platform, has its own venture capital firm which is dedicated in investing on startup projects. The firm launched in 2018 and has now invested in a number of projects that includes Web3 infrastructure, decentralized finance (DeFi), NFTs, and metaverse technologies.
Binance Labs
After being found in 2018, Binance Labs funded and incubated a large number of startup companies. The firm's main goal is to provide assistance to projects which can help grow the blockchain ecosystem and creating communities that can help advance the crypto world.
The firm invested in companies like Polygon, STEP'N, BitTorrent, Biswap, AnySwap and many more.
Digital Currency Group (DCG)
Digital Currency Group also known as DCG first launched in 2015 by Barry Silbert. The firms has 7 subsidiaries which are Genesis, Grayscale, CoinDesk, Foundry, Luno, TradeBlock and HQ.
Digital Currency Group has invested in hundreds of companies to this day which includes Kraken, BitPay, Ripple, Coinbase, BitFlyer, ZCash and Circle.
Final Thoughts
Venture Capital Firms have a huge impact in the advancement of Crypto and Blockchain Technology. Great ideas can be supported and pushed to the next level with the help of VCs which in return can encourage entrepreneurship in the crypto world. The benefits of amazing startup projects can also be share in a wider scale.
Projects that are backed by VCs can also be a great source of investments. Crypto investors usually check which VCs are backing new projects to minimize the risk that comes with pre-seed and seed round investments. But it is also worth remembering that bad VCs can drag projects down as we saw with firms like Three Arrows Capital (3AC) this year.
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Disclaimer
I am not a financial advisor. The information found here are for educational purposes and cite my personal opinion.
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