The cryptocurrency space saw a lot of interest from asset managers and venture capital organizations in 2021, which translated to a significant amount of investment made in the space during the year 2021.
Data from The Block reveals that a total of $25.1 billion in venture funding was allocated across 1,703 cryptocurrency/blockchain deals in 2021. The most dominant deals in 2021 included those made in Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs) or gaming and Web3.
When compared to 2020, which saw venture funding of approximately $3.1 billion, this is up over 709.68% when compared to the figure of 2021. 2021 was a power year because looking at the last six years to 2020, investment from venture funds have an aggregated total of $14.4 billion, with 2018 being the highest year with a total of $5.8 billion worth of investments.
The year also saw a significant increase in merger and acquisition transactions in 2021. Data shows that M&A transactions were at a record high in the cryptocurrency space as it grew by 730% when compared to 2020, to $6.1 billion in 201 transactions.
According to The Block, the explosion in larger deal sizes in 2021 can be seen further when comparing the sizes to the previous year in 2020, where there were only 4 deals that were greater than $100 million in size. Year-to-date, that number has grown to 48 deals, or a 1,100% increase year-on-year. Deals in the $50-<$100 million range encountered similar growth. Deals in this range have increased from 3 in 2020 to 56 during 2021, a 1,767% increase.
The increasing frequency of mid to later stage rounds in 2021 resulted in at least 65 companies in the blockchain/crypto sector reaching unicorn status which means a firm with a valuation of $1 billion or more.
In October 2019, the research firm, Huran found a total of 11 unicorns in the blockchain industry. Over two years, there have been approximately 490% increase in the number of companies reaching unicorn status.
According to The Block, there were only a total of 10 companies that hit unicorn status before the start of 2021. In 2021 alone, there have been four times that amount, with 40 blockchain firms. Compared to 2020, the number of blockchain unicorns has increased by 1,900% year-on-year.
Among the largest 15 raises in the crypto sector’s history, 14 occurred in 2021. As the year progressed, so did the larger raises, with four of the qualifying deals occurring during the first two quarters, and then five occurring in each of Q3 and Q4. Of these firms, their breakdown by vertical includes Crypto Financial Services (35.7%), Trading/Brokerage (21.4%), Infrastructure (21.4%), and NFTs/Gaming (21.4%).
Prior to this year, not a single NFTs/Gaming deal had qualified as one of the fifteen largest, however, now not only did three raises qualify, but two of the three largest raises ever are by blockchain gaming firms, which includes Forte and Sorare’s $725 and $680 million Series B rounds.
For the second consecutive year, M&A transactions were at a record high for the sector. The 201 acquisitions that occurred topped the previous high last year, when 85 transactions took place. That growth represents roughly a 136% increase in M&A activity year on year. This does not include transactions relating to Special Purpose Acquisition Company (SPAC).
FTX Exchange raised the highest amount in 2021, with $900 million raised in total. This is followed by Celsius Network, the crypto credit and lending firm that managed to raise $750 million in 2021. Forte came in third, being able to raise $725 million in 2021, which would be focused on NFTs and gaming.