- Sequoia Capital has let go of seven members of its in-house recruiting and talent team, following the departure of five partners.
- This move signals a need for other firms to reevaluate their platform teams, which have grown significantly during the bull market.
- Many venture capital firms have adopted the concept of offering startups both capital and hands-on support, leading to an increase in noninvestment professionals on staff.
- The number of noninvestment professionals in VC firms has increased from 27% to 37% since 2000, while the average venture firm has expanded its headcount by 124%.
- A community of platform venture capitalists claims that having these employees leads to higher returns.
Main financial assets discussed: Hut 8 Mining Corp. (HUT), Marathon Digital (MARA), Riot Platforms (RIOT), Bitcoin (BTC-USD)
Top 3 key points:
1. Hut 8 faced challenges in Q2, including a drop in hash rate and decrease in Bitcoin mined. The company reported a net loss but showed improvement compared to the previous year.
2. Hut 8 made strategic moves in Q2, including securing a credit facility, gaining clients for its HPC business, and working towards a strategic merger with US Bitcoin Corp.
3. Hut 8's mining efficiency is lower compared to its peers, but the pending merger with US Bitcoin Corp could improve its capabilities and align it with industry leaders.
Recommended actions: **Hold**. While Hut 8 faced challenges in Q2, the strategic moves and pending merger suggest potential for improvement. However, it is important to monitor Bitcoin price volatility and developments in the crypto mining sector closely.
Main topic: The U.S. Small Business Administration plans to invest billions into venture capital funds to support startups in underserved areas and industries crucial to national security.
Key points:
1. The move aims to modernize the U.S. investment landscape and diversify venture capital investment beyond popular sectors.
2. The program will focus on addressing market gaps and investing in perceived riskier territories.
3. The SBA has allocated up to $6.9 billion for fiscal 2024 to provide substantial funding support.
Main topic: Decline in venture capital (VC) funding for cryptocurrency startups
Key points:
1. Crypto startups secured the lowest amount of VC funding ($2.3 billion) since Q4 2020 in Q2 2021.
2. Regulatory concerns and crypto market volatility have contributed to the decline in VC funding.
3. Reduced VC funding could hinder innovation and intensify competition among startups in the crypto sector.
In July, capital inflows from venture capitalists in the crypto sector decreased by 10.26%, with $700 million raised, as macroeconomic conditions and geopolitical events continued to impact investment decisions, although some notable outliers, such as Polychain Capital and CoinFund, launched new funds totaling millions of dollars, and the potential approval of spot Bitcoin exchange-traded funds (ETFs) in the U.S. could bring renewed attention and capital into the industry. Infrastructure and Web3 sectors received the most capital inflows, while overall investor activity in the blockchain industry remained low, suggesting a slow return to a steady upward trend.
Venture capital firm Vessel Capital has launched a $55 million fund to invest in Web3 infrastructure and applications, aiming to assist early-stage crypto founders in launching and growing their projects by providing guidance and advice. The fund's resources will be deployed over a five-year period, and the team's experience as startup founders will enable them to better understand entrepreneurs' needs.
Despite a decrease in venture capital investments in June, new crypto projects are still attracting funding, including Orbital's $6.4 million raise for expanding blockchain payment infrastructure, unshETH's $3.3 million seed round for decentralized finance solutions, ZTX's $13 million funding for Web3 infrastructure development, Stroom Network's $3.5 million raise for Bitcoin staking, and Fxhash's $5 million funding for its digital art platform.
Web3 venture capitalists have established a $20 million fund to invest in blockchain gaming and collectibles projects, as well as other Web3 initiatives.
Mirae Asset Securities, South Korea's largest financial group, is partnering with Ethereum scaling platform Polygon Labs to promote tokenization in finance and drive the adoption of Web3 technologies. Through the collaboration, Mirae aims to establish itself as a global leader in tokenized securities, bringing real-world assets onto the blockchain. Tokenization projects have already been initiated by other financial giants, and the industry is projected to grow significantly, reaching $16.1 trillion by 2030. The partnership is expected to accelerate the adoption of Web3 technologies in the financial sector and enhance interoperability with foreign financial systems.
Crypto projects are actively seeking funds from private investors, according to Chris Burniske, the founder of Placeholder Capital, who believes that private investors will enter the space once the crypto markets show signs of strength.
Genesis Global Capital, a crypto lending firm and subsidiary of Digital Currency Group, will cease spot and derivatives trading for crypto assets through its British Virgin Islands unit due to voluntary and business reasons.
Germany's blockchain sector received $355 million in venture capital funding, marking a 3% yearly increase and achieving an all-time high share of global funding in 2023, despite a decline in the global blockchain market, according to a report by Crypto Valley Venture Capital (CVVC).
Blockchain Capital has raised $580 million for two new funds, with $380 million allocated for early-stage companies and protocols, and $200 million for late-stage investments, indicating continued investor interest despite the subdued state of the digital asset market.
Venture capital investments in the Middle East have been booming, particularly in deep tech startups focusing on Web3 applications, blockchain, and carbon control, with UAE-based Fuze securing $14 million in seed funding, Cultos Global receiving an undisclosed sum, and Zero Carbon Ventures obtaining $5 million, signaling the region's rising role in innovation and change.
Despite tight liquidity and adverse macroeconomic conditions, several crypto startups have successfully raised significant capital, including Bubblemaps with $3.2 million for data visualization, CoinScan with $6.3 million for crypto analytics, Hinkal with $4.1 million for privacy in DeFi trading, and Mythic Protocol with $6.5 million for collaborative entertainment. Additionally, Blockchain Capital closed two new funds with $580 million to be deployed in crypto gaming and decentralized finance projects.
Blockchain technology is breathing new life into traditional assets as big finance firms invest in token trading and investment platforms, with more than a third of institutional investors in the U.S. and almost two-thirds of high-net-worth investors planning to invest in tokenized assets this year or next.
The global blockchain finance market is predicted to become a $79.3 billion industry by 2032, driven by the disruptions caused by the COVID-19 pandemic and the potential for reduced operational costs, with collaborations and acquisitions being heavily explored as a top strategy by market players.
Untangled Finance, a tokenized real-world asset marketplace, has launched on the Celo network after securing $13.5 million in venture capital funding, with plans to expand to Ethereum and Polygon via Chainlink's Cross Chain Interoperability Protocol. The platform aims to bring tokenization to the private credit market and offers features such as a built-in liquidation engine and a forward-looking credit assessment model.
The blockchain gaming industry received $600 million in venture capital investment in Q3 2023, a 38% decrease from Q2, bringing the total funding for the year to $2.3 billion; however, this is only 30% of what was raised in 2022, while the broader gaming industry has been hit hard with over 6,100 job losses.
