Here’s What The Big Boys Are Investing In

GM, Anon!

Despite the recent dip in the market, long-term conditions seem very positive. The Fed has announced a relaxing of policies, which means no hiking of rates and a slowdown in quantitative tightening. 

This suggests the money printer will go brrrrrr, and liquidity should flood back into the financial system. Risk-on assets like crypto are expected to hit new highs. When? Who knows, but it's likely that by the middle of this year, things will turn around for the better.

Now, this brings us to today's topic of tracking the mega smart money. Because when liquidity starts flowing and the sun starts shining, all the money that major VCs have been pumping into projects is likely to materialize in many of these projects being launched or making big moves.

Today we're going to take you through some of the biggest fundraising rounds that have been conducted recently, and who the big players are that are moving hundreds of millions into projects. Why is this important?

Let’s break it down 👇

Tracking The Big Boys

These firms are made up of some of the sharpest and keenest minds in finance. They have access to research and insider information that very few in the industry have. Furthermore, they have very, VERY deep pockets. When these entities invest in a project, it's usually for a good reason.

Now, you might be asking about the hiccups that happen, for example, projects that go nowhere despite having had large raises. It's true that these entities don't always get it right. They're exposed to the same market forces as everyone else. That includes the attention economy we've discussed in previous letters and global liquidity cycles.

Moreover, these companies can partake in 'spraying and praying' strategies, where they invest in a bunch of projects across different sectors hoping one takes off, which will recoup the losses from other investments. 

Overall, though, their insights and investments are solid, and it’s worth at least knowing what they're looking at so you can have your pulse on the technological and narrative shifts of the market. See this as additional information to include in your overall analysis.

Also, take note that if airdrop farming is your interest, it's usually the projects with the largest raises that you want to keep an eye on, as these tend to result in the most lucrative airdrops. However, this is not always the case, as seen with the recent EigenLayer fiasco when its airdrop details were released.

Check out these useful sites to keep your finger on the pulse of where VC money is flowing.

• CoinCarp

• Crypto Fundraising

• DropsTab

And remember, these firms receive substantial allocations for investing their capital. They aim to create a liquid market for their token allocations. This is where you come in; often, retail investors become the market they offload their tokens onto. 

The price of tokens will initially surge, attracting retail interest, and then likely plummet. Be diligent—research how the tokens are being unlocked and over what timeframe, and make sure to exit your positions in a timely manner.

Major Raises

In the first quarter of 2024, venture capital investment in the crypto industry rebounded significantly, suggesting a revival of investor confidence after the crypto winter that began in 2022. 

The "2024 Crypto Spring Report" by Chainalysis highlighted that Q1 2024 marked the first increase in quarter-over-quarter crypto investment since early 2023, with total funding approaching $2.5B. This recovery follows a considerable downturn in 2023 when quarterly funding volumes fell below $2B.

The specific amounts and the timing of investments by major firms in a fundraising stage can often be unclear. However, details about significant raises are usually disclosed and made public.

The firms most active for 2024 are displayed in the graphic below.

OKX has embarked on an aggressive venture capital initiative, positioning itself as a frontrunner in investment activities this year. 

The sectors that OKX has mostly invested in are “DeFi,” “Chains,” and “Blockchain Service.” Take note of Animoca Brands, which are trailing closely behind. Interestingly, Animoca have made substantial investments in GameFi. 

Given the current trajectory towards a parabolic bull market later this year and into 2025, these figures are expected to evolve. We anticipate significant shifts in the rankings, with the potential for new firms to emerge and enter the top 10.

Let's explore some of the high-profile fundraising events that have made headlines in 2024. 

Berachain secured a $100M investment from prominent entities like BH Capital, Framework Ventures, and PolyChain Capital. Berachain is an EVM-compatible L1 blockchain distinguished by its adoption of the Proof-of-Liquidity (PoL) consensus mechanism. It’s also worth noting the team’s early ties to OlympusDAO. Another highlight is the famous Bong Bears from the original NFT collection. Rumors suggest that owning one of these 100 NFTs could secure a substantial airdrop when the chain officially launches.

Moving on,

Monad is an upcoming L1 blockchain, set to rival the Ethereum Virtual Machine with its capability of handling 10,000 transactions per second. Monad attracted significant investment from firms such as Paradigm, Electric Capital, Coinbase Ventures and more which resulted in $226M being raised. 

Another very impressive amount was raised for EigenLayer. Andreessen Horowitz, a top-tier venture capital firm, committed $100M in Series B funding to Eigen Labs. This funding enhanced the capabilities of Eigen Labs' development studio, which focused on advancing EigenLayer. Speaking of a16z, they are one of the most active of the major VC firms. Seeing their investments in Ronin, Solana and many more yield astounding returns.

A major project set to launch in 2024, which has attracted significant capital, is zkSync. This project received funding from notable industry players, including OKX Ventures, a16z, DragonFly, and others. In total, zkSync raised approximately $500 million, though this funding was secured before 2024. The investments by these VC firms will soon be coming to fruition. Moreover, zkSync is one of the most anticipated airdrops of 2024.

Other significant venture capital deals include investments in interoperability projects like Wormhole and the DePIN project Together.ai, each securing $225M. Additionally, Swan Bitcoin recently received $165M in funding. Prominent investors in these projects include companies like Brevan Howard, Coinbase Ventures, Multicoin Capital, Jump Crypto, ParaFi, Dialectic, Borderless Capital, and Arrington Capital​.

Here are the top raises for 2024 thus far. Monad is coming in at number one for the year.

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Which Sectors Are Getting The Most VC Funds

In 2024, the venture capital landscape for crypto and blockchain is bouncing back strongly, marking a resurgence in investor confidence. 

This comes after a rocky period filled with high-profile collapses and uncertainties around regulations that dampened the sector's enthusiasm. Since the start of the year, investments have surged by about 25% from the last quarter of 2023, with significant capital injections into various tech niches.

Check out this chart:

The chart above shows the amount of capital crypto projects have raised each month in 2024. As you can see, over the last two months (March and April) crypto projects have attracted over a billion dollars in capital.

What Are VCs Investing In?

Let’s look at the sectors getting the most fundraising each month.

#1 DePIN

There is a major interest in decentralized physical infrastructure networks or DePIN. These projects, which include initiatives like Helium for decentralized wireless networks and Filecoin for data storage, are drawing in significant funding. 

They're appealing because they shift traditionally centralized infrastructure into more efficient, community-driven models powered by token incentives. These systems have real potential to cut costs and improve efficiencies.

Despite the buzz, many DePIN projects are still in the early stages and need help attracting customers and generating revenue. The revenue numbers are still quite modest compared to their lofty token valuations, indicating limited user adoption. 

However, VCs remain unfazed and are seemingly betting on the long game, believing in the potential of these projects to shake up established markets. 

The substantial investments pouring into DePIN projects underline a strong belief in their future growth, especially as the technology matures and finds more real-world applications.

#2 Decentralized AI

Venture capital is increasingly flowing into decentralized AI projects, as exemplified by the growing interest in platforms like Bittensor. This project, which started in 2019 under the incubation of Polychain, a VC firm founded by an early Coinbase employee, Olaf Carlson-Wee, has been a quiet yet significant player in the space. 

The appeal of decentralized AI in the venture capital community stems partly from its promise to democratize AI technologies. Traditional AI developments have been predominantly centralized, with major companies like Google and OpenAI at the forefront. 

Decentralized AI projects like Bittensor propose a different path, where the power and potential of AI are distributed across a network of contributors rather than being controlled by a single entity. This approach fosters innovation and aligns with the broader ethos of the cryptocurrency and blockchain movement, which champions decentralization and open participation.

The potential for revolutionary breakthroughs in how AI is developed and deployed continues to attract venture capital, betting on the promise that these platforms could fundamentally reshape the AI landscape.

#3 GameFi

The GameFi industry is experiencing a robust resurgence in venture capital investment, evidenced by a significant uptick in both funding and deal volume in early 2024. According to Konvoy Ventures, the sector secured $594M in the first quarter alone, a dramatic 94% increase from the previous quarter, and completed 124 deals, marking a 28% rise. This surge is driven by the promising outlook that the gaming market will expand to $225B by 2029, from $189B in 2023.

Significant funding rounds highlight the varied focus areas within the gaming sector. Tevaera raised $5M to develop its gaming ecosystem on the zkSync platform, showcasing a trend toward leveraging blockchain technology to address Web3 gaming infrastructure challenges. 

Similarly, AVALON secured $10M to create a multiplayer game that permits players to maintain their assets and progress across different worlds, illustrating venture capital's growing interest in technologies that enhance immersive gaming experiences.

That's all for today, anon!

We hope you found this issue enlightening. Keep an eye on where the big money is moving—not just to avoid being VC exit liquidity, but also to stay informed about where liquidity and market attention are headed.

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