15 Crypto VCs Active in Crypto Projects Investment (2023)

Venture capital firms in the crypto space seek to invest in high-potential blockchain projects and companies. They typically invest in early-stage startups and provide capital, advice and resources to help these companies grow. Venture capital firms play a vital role in the blockchain ecosystem, providing valuable resources to support projects’ growing and scaling quickly. 

In addition, crypto VCs provide training and guidance to startups as they navigate the often complex world of blockchain technology. By helping entrepreneurs understand the nuances of blockchain technology, they can ensure that their investments are well-positioned for success. The preferred sectors and stages of investment vary, depending on the firm. Still, these firms prefer to invest in startups building blockchain-based products, services and platforms that solve real-world problems. The most popular in the crypto scene include:

• DeFi

• Crypto infrastructure

• Security tokens/protocols

• Crypto payments/remittance services

• Crypto exchanges/trading platforms

• Wallets and custodial services

Need more help understanding how it works? Let's dive right into the mechanics. 

How Does Crypto VC Funding Work?

Crypto venture business funding is a form of financing that’s used to invest in early-stage blockchain projects. This type of investment typically involves the purchase of equity or tokens in the project, which gives investors a stake in the future success of the business.

The process begins with the project founders seeking venture capital firms specializing in blockchain projects. These companies usually have a portfolio of investments and will evaluate the potential success of each project before deciding whether or not to invest.

The venture capital firm will then negotiate terms with startup companies, such as how much money they will invest, what kind of equity or tokens they will receive, and how long their investment will last.

Once both parties reach an agreement, funds are then transferred from the venture capital firm to the company's bank account. Depending on the fund type, the startup can use the investment capital for various purposes, such as hiring new team members, developing new products or services, and marketing campaigns. These include different rounds of series funding including Pre-seed funding, Seed funding, Series A, B, C or D funding to solidify their operations.

The venture capital firm also provides guidance and advice to help ensure that the company is successful. This includes assisting teams in developing their business plan and connecting them with other industry experts who can provide additional resources and advice.

Finally, once a certain period has elapsed (usually 5–7 years), investors may have an opportunity to cash out their investments by either selling off their equity or tokens on an exchange platform (if applicable), or negotiating with the project founders directly for an exit strategy.

Top Criteria of a Good Crypto Venture Capital Firm

You can determine whether a crypto venture capital fund is effective or not. Here’s a list of criteria to consider:

1. Total assets under management: Assets under management (AUM) measures the total value of all the investments managed by a venture capital firm. It includes all the assets that have been invested in companies, funds and any cash or liquid investments held by the firm. AUM is used to measure the size and performance of a venture capital firm, and can indicate its success in attracting investors and making successful investments.

2. Number of successful investments (track record): The number of successful investments (track record) is vital for determining the success of a venture capital firm because it serves as an indicator of its ability to identify, invest in, and help grow promising businesses. It provides a measure of the firm's performance over time. and allows potential investors to gauge the quality and success of the investments made. A track record of successful investments can also provide valuable insights into a firm's investment strategy, risk management approach and overall value-add to its portfolio companies.

3. Reputation in the industry: Reputation in the industry is crucial for determining the success of a venture capital firm. It can be a major factor in attracting potential investors. A good reputation helps build trust, which is essential for successful fundraising and investment. Additionally, a solid reputation can help to create relationships with the most promising entrepreneurs and startups. This can lead to more successful investments and higher returns for the firm. Finally, a good reputation can also increase the firm's visibility, leading to more opportunities and better deals.

4. Network and resources: Networks and resources are essential for determining the success of a venture capital firm because they allow the firm to identify potential investments, conduct due diligence and provide ongoing support to its portfolio companies. Having access to resources such as industry contacts, financial advisors, legal counsel, and other specialized professionals can help a venture capital firm make informed decisions, maximize investment returns and protect its interests. Additionally, having an extensive network of investors can provide a venture capital firm with additional funding sources for new investments and support existing portfolio companies.

5. The team: The quality of a venture capital firm's team and staff determine the firm's success, since it plays a significant role in the decision-making process. The team and staff must be knowledgeable about the industry, have a good understanding of the market, and be able to identify and assess potential investments accurately. Additionally, they must have strong relationships with entrepreneurs and other investors to make well-informed decisions that benefit the firm. A strong team and staff can help ensure that a venture capital firm makes sound investments that generate high returns for its investors.

6. Portfolio projects/companies: The quality of portfolio clients directly affects a crypto VC's return on investment. Venture capital firms invest in companies expecting to generate a significant return. If the portfolio companies are unsuccessful, the venture capital firm won’t be able to generate a profit, and will ultimately fail. Additionally, having high-quality projects and clients allows venture capital firms to attract more investments from other investors, which helps them grow and expand their operations.

How Do Crypto VC Firms Support Blockchain Startups?

Crypto VC firms typically provide capital to blockchain startups in exchange for a stake in the new business. In addition to providing capital, crypto VC firms offer support and guidance to these startups, assisting with developing their product/service, identifying potential customers and partners, and navigating the legal and regulatory environment. Crypto VCs also provide access to their network of industry contacts and resources, which can help the startup succeed.

Top Crypto VC firms

1. Coinbase Ventures

Total assets under management: Over $30 billion in venture funding in 2021. 

Number of successful investments (track record): 315

Source: Crunchbase Coinbase Ventures

Reputation in the industry: Coinbase Ventures isn’t directly backed by Coinbase, but is a separate entity. It has made investments in several successful projects and has also been involved in industry events and initiatives such as the ChainXChange conference, Decentralized Web Summit and Token Summit.

Network and resources: Coinbase Ventures looks to collaborate with partners who share their mission of creating an open financial system for the world. It utilizes Bitcoin, Ethereum, Ripple and Litecoin.

Portfolio projects/companies: Avalon, Diagonal Finance, Magic Eden, Sardine and YOZ Labs.

2. Pantera Capital

Total assets under management: $4.1 billion in blockchain-related assets

Number of successful investments (track record): 190+

Reputation in the industry: Pantera Capital is widely known as one of the top venture capital firms in the world. It has invested in some of the most successful crypto companies, including Circle, Coinbase and Ripple. It has also been credited for helping to launch the ICO boom in 2017. The firm is well-respected for its expertise and experience in the blockchain and cryptocurrency industry, and is seen as a reliable source of investment advice.

Network and resources: Pantera Capital also utilizes its network of over 1,000 investors and strategic partners to provide access to resources such as capital, talent and market intelligence. Additionally, Pantera Capital has an extensive research team that offers insights into the blockchain ecosystem and helps identify opportunities for investment.

Portfolio projects/companies: BitDAO, Korbit, Prism, SynFutures, Zcash

3. Sequoia Capital

Total assets under management: $85 billion

Number of successful investments (track record): 500+

Reputation in the industry: Sequoia Capital is one of the top venture capital firms in the world. It has an excellent reputation for its track record of investing in some of the most successful tech companies, such as Apple, Google and LinkedIn. Its reputation for spotting and nurturing early-stage startups has earned it a great deal of respect from entrepreneurs, investors, and the tech industry in general.

Network and resources: Coinbase, Ripple, Block.one

Portfolio projects/companies: Caldera, Handshake, Multis, Privy, Strips Finance

4. Polychain Capital

Total assets under management: $6 billion

Number of successful investments (track record): 139

Reputation in the industry: Polychain Capital has a generally positive reputation worldwide. It has proven to be one of the best venture capital firms in cryptocurrency and blockchain, and industry experts have widely praised its investments and partnerships. The company has also received numerous awards for its work, including being named one of the top 50 venture capital firms of 2018 by Forbes.

Network and resources: Bitcoin, Ethereum, Tezos, Polkadot, and Cosmos

Projects/companies: Ava Labs, Kollider, Orca, River Financial

5. Binance Labs

Total assets under management: $7.5 billion

Number of successful investments (track record): 85

Reputation in the industry: Binance Labs is a blockchain incubator and venture fund created by Binance, one of the world's leading cryptocurrency exchanges. It has a major following in the industry for its commitment to helping startups succeed in the crypto and blockchain space.

Network and resources: Ethereum, EOS.IO, Neo, Cardano, IOST.

Portfolio projects/companies: Aptos Labs, Improbable, Sky Mavis, 1inch Network, CertiK

6. Block Labs

Total assets under management: $29 billion

Number of successful investments (track record): 32

Reputation in the industry: Block Labs is a relatively new company and has only recently begun to establish its reputation. However, the company has been praised for its innovative approach to blockchain technology and its commitment to providing quality business solutions. Block Labs has also received positive reviews from industry leaders for its work in developing blockchain-based applications.

Network and resources: Ethereum, Hyperledger Fabric, R3 Corda

Portfolio projects/companies: LawBEAM, Fight Out, Tamadoge

7. Digital Currency Group

Total assets under management: $3.5 billion

Number of successful investments (track record): 278 successful investments

Reputation in the industry: DCG has an obligation of $575 million to Genesis' crypto lending service, with the due date for repayment set for May 2023. Taking this into account, it’s understandable why there are worries that Digital Currency Group might have to declare bankruptcy.

Network and resources: The company has a strong network of industry partners, advisors and portfolio companies. They also have access to resources such as conferences, events, research, and market intelligence.

Portfolio projects/companies: Abra, eToro, Paxos, Staked, Zerion, and 273 others.

8. Paradigm

Total assets under management: $1.51 billion

Number of successful investments (track record): 75

Reputation in the industry: Paradigm is a trusted partner for innovative and disruptive crypto/web3 companies and protocols. It has invested in some of the most successful projects in the space, including Ethereum, MakerDAO, Filecoin, 0x and DFINITY. Industry leaders have also recognized the company for its commitment to supporting startups with capital, strategic guidance and operational support.

Network and resources: Ethereum, Bitcoin, Polkadot, Solana, Filecoin

Portfolio projects/companies: Blur, Genesis Digital Assets, MoonPay, Sky Mavis, Zora

9. Andreesen Horowitz (a16z)

Total assets under management: $4.5 billion

Number of successful investments (track record): 105

Reputation in the industry: The reputation of a16z crypto is very positive worldwide. The company has invested in some of the most successful startups in the crypto and web3 space, and has been featured in publications such as Forbes, Bloomberg Businessweek and TechCrunch. Additionally, its portfolio companies have achieved significant success, furthering its reputation as a top-tier venture capital fund.

Network and resources: Ethereum, Tezos, Polkadot, Filecoin

Portfolio projects/companies: Alongside, Halliday, Loop Crypto, Talos

10. Protocol Ventures

Total assets under management: $250 million

Number of successful investments (track record): 7

Reputation in the industry: Protocol Ventures has become one of the leading venture capital firms in cryptocurrency. The company is well-known for its investments in high-profile startups such as Coinbase and Circle, and its strong presence at major crypto events such as CoinDesk's Consensus and the Ethereal Summit. Protocol Ventures is also known for its involvement with industry-leading accelerators and incubators, such as Boost VC and Plug & Play.

Network and resources: Bitcoin, Ethereum, Ripple, EOS.IO

Portfolio projects/companies: Coinbase, Circle, Bitstamp, Prism, Genesis

11. FBG Capital

Total assets under management: $312 million

Number of successful investments (track record): 30

Reputation in the industry: FBG Capital has a strong reputation worldwide for its work in the cryptocurrency and blockchain space. The company has been featured in major publications such as Forbes and Bloomberg Businessweek, and is well-regarded by the crypto community for its investments in promising projects.

Network and resources: Ethereum, EOS.IO, Neo, Ripple

Portfolio projects/companies: Boston Protocol, Equilibrium, Litentry, NuCypher, ParaState

12. Galaxy Digital

Total assets under management: $1.8 billion

Number of successful investments (track record): 152

Reputation in the industry: Many industry experts highly praise Galaxy Digital's commitment to the crypto and blockchain space. The company has received recognition from leading publications, and its founder, Mike Novogratz, is a well-known figure in the industry.

Network and resources: Bitcoin, Ethereum, EOS.IO, Stellar, Ripple, Hyperledger

Portfolio projects/companies: Encode Club, Certora, Skolem Technologies, OneOf, Aspen Creek Digital Corporation

13. Union Square Ventures

Total assets under management: $1.5 Billion

Number of successful investments (track record): 130+

Reputation in the industry: Union Square Ventures is well-regarded in the blockchain and cryptocurrency industry, with a reputation for investing in early-stage projects. The firm has been praised as one of the most active investors in the space. Its portfolio includes some of the biggest names in cryptocurrency, such as Coinbase, Ripple, Circle, Blockstack and Polychain Capital. The company has also been recognized for its focus on diversity and inclusion in its portfolio companies.

Network and resources: Ethereum, Bitcoin, Hyperledger, Ripple, Quorum, R3 Corda

Portfolio projects/companies: Blockstack, Circle, Coinbase, Paxos, Ripple

14. Polychain Capital

Total assets under management: $1.2 billion

Number of successful investments (track record): 190

Reputation in the industry: Polychain Capital has been featured in numerous publications, including Forbes, Bloomberg Businessweek, Wired and TechCrunch. Also, Polychain Capital has been recognized for its innovation by winning awards from the World Economic Forum and the Financial Times.

Network and resources: Ethereum, Bitcoin, Stellar, Cosmos, Polkadot, Filecoin, Hyperledger Fabric

Portfolio projects/companies: Blockstack, Celo, DFINITY, MakerDAO, 0x

15. Draper Associates

Total assets under management: $5 billion

Number of successful investments (track record): 139

Reputation in the industry: Draper Associates has an excellent reputation overall. The firm has been actively involved in the crypto and blockchain space since 2013, and has helped numerous companies raise seed capital. Its portfolio includes some of the most successful projects in cryptocurrency, including Coinbase, Ripple and Tezos.

Network and resources: Ethereum, Bitcoin, Hyperledger Fabric, EOS.IO

Portfolio projects/companies: BitGo, Coinbase, DFINITY, Ripple, Tezos

Takeaways

Crypto venture capitalists specialize in investing in early-stage startups that offer products or services related to cryptocurrency, blockchain technology and digital assets. They typically fund projects through equity investments, token sales or other financial instruments. In addition, crypto VCs also provide guidance and advice to the startups in which they invest.

While every VC firm listed in this piece has an impressive track record and is widely recognized for being one of the best in their field, many others have yet to establish themselves. More companies are entering the cryptocurrency and blockchain space every day. However, not every project receiving VC funding is guaranteed to succeed. Ultimately, it’s up to the startup to prove that its product or service is a good investment for VC firms.

*Disclaimer: This article is purely for educational purposes only. Bybit is not affiliated or associated with any of the organizations listed above. Please do your research before investing in any digital assets.