Crypto Startups Drive Q1 Fintech Funding Boom

Friday 06 May 2022 1:00 p.m.

Fintech firms raised $29.3 billion in the first quarter of the year through a series of high-value crypto deals that new data has revealed.

A record $122 billion was raised by fintech companies in 2021 and the momentum continued in 2022 with funding up 13% in the first quarter, according to data from Pitchbook. A number of crypto firms have struck bumper deals this year with digital asset exchange FTX closing a $400 million round in January at a valuation of $32 billion, digital asset custodian Fireblocks raising $550 million and Consensys securing $450 million in funding in March.

“The increase in crypto and blockchain investments reflects the growing awareness that blockchain, including tokenization and programmable digital functionality, has the potential to transform all aspects of financial systems,” commented Adam Jackson, Director of Policy at Innovate Finance.

“Regulators and government have become aware of the possibilities and recent announcements from the US and UK provide a more positive policy environment that will encourage investment,” Jackson added.

Both the UK and the US have taken steps to clarify regulations amid an explosion of interest in digital assets. Last month, UK Chancellor Rishi Sunak announced plans to turn the UK into a “global hub” for digital assets by integrating stablecoins into the national payment system and introducing tax incentives for businesses in the UK. digital assets.

The policy announcement is a signal that crypto has become too big for lawmakers to ignore. In 2021, $31.6 billion in venture capital funding flowed into crypto projects globally, more than the previous 10 years combined according to Pitchbook. Crypto firms have already secured $13 billion in venture capital so far this year, putting the industry on track to beat last year’s record funding levels.

“The role of traditional corporate finance is rapidly changing with the adoption of new financial paradigms around crypto, DeFi and the web3,” said Pitchbook researcher Robert Le.

“Traditional finance software (TradFi) has been slow to adopt crypto features and services, which has created a gap for startups to develop innovative solutions for businesses with crypto strategies,” he said. -he adds.

However, dealing with wild fluctuations in the crypto market does not always prove smooth sailing for crypto-focused funds.

Asset management firm Tiger Global, which has backed crypto funds such as FTX, Blockdaemon and Moonpay, saw its flagship hedge fund plummet 40% in the first four months of the year as stocks technologies were collapsing.

Read more: Crypto VC boom shows no signs of stopping in 2022

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Crypto Startups Drive Q1 Fintech Funding Boom

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