Crypto VCs are back in action amid market rally

For the second month in a row, crypto VC funding has exceeded $1 billion.
For the second month in a row, crypto VC funding has exceeded $1 billion.

Venture capital (VC) funding rounds are soaring as the crypto bull market is back and firing on all cylinders. 

On May 16, crypto venture firm Aquarius announced the launch of a $600 million multistrategy liquidity fund to help blockchain foundations and ecosystem projects boost on-chain liquidity. In a statement to Cointelegraph, Aquarius staff mentioned that the strategy fund is supported by “Bitrise Capital, various leading miners, family offices, and influencers.” 

In addition, the $600 million strategy fund will help blockchain infrastructure, decentralized finance, artificial intelligence, the Bitcoin (BTC) ecosystem, modular architecture and early-stage data layer projects build their communities alongside developing go-to-market products. “As the first institutionalized fund of its kind, it systematically manages on-chain liquidity and assists various blockchain foundations and ecosystem projects in meeting their liquidity needs,” wrote Aquarius. 

Aquarius was founded in 2018 by venture capitalist Lin Yang in Singapore, who has backed notable projects such as Conflux, as well as investments in emerging Web2 sectors, including new energy, advanced manufacturing and finance. The firm relocated its headquarters to New York on May 8. 

Meanwhile, crypto ecosystem projects are getting considerable funding as the bull market heats up. 

On May 6, Cointelegraph reported that crypto VC funding has topped $1 billion for a second consecutive month this year. April saw $1.02 billion in funding across 161 investment rounds, compared to $1.09 billion in March, both trends not observed since late 2022

Monthly cryptocurrency venture funding amounts since January 2022. Source: RootData

Earlier this month, digital securities platform Securitize raised $47 million in a new strategic funding round led by BlackRock. Blockchain developer Aptos Labs, alongside stablecoin issuers Paxos and Circle, were also among the investors. BlackRock's global head of strategic ecosystem partnerships, Joseph Chalom, will join the Securitize board of directors. He labeled the investment “another step in the evolution of our digital assets strategy […] that will help meet the future needs of our clients.”

In April, Puffer Finance, a liquid staking project built on Ethereum layer-2 solution EigenLayer, secured $18 million in a Series A funding round from the likes of Coinbase Ventures and Kraken Ventures for its mainnet launch. Puffer Finance’s technology allows Ethereum validators to reduce their initial capital requirement to just 1 Ether (ETH), down from the 32 ETH required for individual stakers. The protocol has surpassed a total value locked of $1.4 billion shortly after its debut in February. 

The market has changed dramatically from where it was a year ago. 

In September 2023, Tony Cheng, a partner at Singaporean crypto investment firm Foresight Ventures, recommended that projects do whatever they can to just survive. “If you are lacking in capital, if you don’t have the runway to kind of get you through the next year or so, you should be taking capital and taking as much as you can get because that money might not be available anymore after maybe two or three months,” he explained at the time.

Since bottoming below $16,000 from the sudden collapse of cryptocurrency exchange FTX in November 2022, Bitcoin has gained over 300%, fueled by the approval of spot Bitcoin exchange-traded funds around the world and gradual repayment of creditors’ money stuck on the defunct exchange. Some VCs are predicting that the current bull market will see another initial coin offering boom exceeding the previous highs in early 2018. 

Related: Crypto VC funding surged 53% in March, Optimism wins largest share