Some positive news for the crypto world, in the form of fundraising figures. The financialization of crypto assets, melding securitization with tokenization, continues to move forward. Based on our latest data, this year saw over 140 crypto investment funds enter the space. While that is below the 270 from last year, a couple of developments are notable.
First, we continue to see new entities formed month over month, even though the narrative is that most crypto funds are 50%+ down this year. Second, there has been a healthy development of ecosystem funds, attached either to exchanges or at the protocol level. These entities are well aligned with funding projects that are adopted by consumers, which then would use the exchange or protocol to engage with the token. Circular logic, or lifting yourself up by the bootstraps — you decide!
We also know that much of the focus in crypto fundraising has now shifted to STOs (security token offerings), with both enterprise blockchain success stories like BNP Paribas building out syndicates of financiers to provide large loans (e.g., Red Electrica), as well as public STO asset examples like the Aspen resort token from Templum. Similarly, many of the crypto funds are doing equity investing first, and getting tokens for free. With that in mind, we are encouraged by the October numbers in our ICO/token database.
ICO funding data listed on public trackers, and cleaned/confirmed by us to the extent possible, shows about $600 million in flows, which is higher than $450 a month ago. But there was a roughly equivalent amount ($600 million) of traditional venture capital activity in the space. Looking at the chart below, it is becoming a trend that VC funding constitutes 50% of the overall money flowing into the space. From an economics perspective, it is good to see institutional investors find the risks attractive again. From a decentralization perspective, it seems less likely that global crowdfunding will democratize the ownership of a future internet.