A look into the investments made by Coinbase Ventures including a breakdown of use-cases and where they're making bets.
Coinbase, one of the prominent cryptocurrency exchanges today, formed its own venture arm, Coinbase Ventures, in 2018 to build its business offering. The aim was not just to provide funding to fintech and crypto startups, but also to invest in potential competitors.
2021 was a record year for Coinbase Ventures (since its launch) with 120 deals backing 115 startups in the blockchain/crypto space. The firm deployed over 90% of its capital last year, hinting at an acceleration in its activity in its fourth year of operation.
Since its launch in 2018 till June 2022, using CB Insights funding data, Coinbase Ventures has participated in 297 deals and backed 277 companies in the blockchain/crypto sector. Seed-stage companies (43%) account for most of these deals, followed by Series A (26%), Series B (8%), Series C (2%), and Series D (1%).
Some of the co-investors Coinbase Ventures frequently participates with include Pantera Capital, Polychain Capital, Andreessen Horowitz, Hashed, ParaFi Capital, Alameda Research, and Digital Currency Group.
The US continues to be home to the bulk of startups in Coinbase Ventures’ portfolio (61%), followed by Singapore (6%), India (4%), the UK (4%), Canada (3%), Australia, Germany, and Hong Kong (2%).
The venture arm’s portfolio has also seen some significant exits from January 2021 to June 2022:
- Bison Trails was acquired by Coinbase in January 2021
- Curv was acquired by PayPal in March 2021
- Blox Staking was acquired by Lukka in October 2022
- Staked was acquired by Kraken in December 2021
- Dharma Labs was acquired by OpenSea in January 2022
- Namebase was acquired by Namecheap in February 2022
The first half of 2022 was tumultuous for the crypto market owing to the collapse of the $60B Terra ecosystem in May. This also contributed to the collapse of Three Arrows Capital, a $10B crypto fund that had leveraged exposure to Terra.
This downturn trickled into the venture landscape as well. Coinbase Ventures’ crypto deal activity in Q2’22 was down 35% QoQ. However, activity in H1’22 grew by 75% compared to H1’21, reflecting an overall growth in its venture practice.
Since the beginning of 2021, Coinbase Ventures has emerged as one of the most active investors in the blockchain/crypto domain.
Most Notable Investments: Blockchain Development Platforms/Infrastructure Tools, DeFi Gaming, NFTs, and Exchanges
Coinbase Ventures has been actively investing in blockchain development platforms and infrastructure tools. For example, in March 2022 it participated in a $450M Seed round to Yuga Labs, a web3 platform known for the popular NFT club Bored Ape Yacht Club, and in a $200M Series C round to ConsenSys, an Ethereum blockchain infrastructure and applications builder, in November 2021.
It also participated in Aptos‘ $200M Seed round and LayerZero Labs‘ $135M Series A round in March 2022. Aptos is a Web3 startup focused on creating the safest and most scalable Layer 1 blockchain. LayerZero Labs is an omni chain interoperability protocol for dApps to build over multiple blockchains.
Coinbase Ventures has also been actively investing in the DeFi space since 2021 with its capital being majorly directed towards the DeFi startups in the US and Singapore. It participated in Seed, Series A, and Series B funding rounds of Canada-based Bitcoin-backed lending platform Ledn in 2021. It also participated in a Seed and Series A funding round to Singapore-based Vauld, an asset-backed lending and borrowing platform. Other notable investments in this segment were Amber Group, Goldfinch, Protego Trust Bank, Euler, MoHash, and Cega Finance.
The venture arm will continue to focus on investing in DeFi protocols, according to its Q2’22 report.
Coinbase Ventures has also been active in the NFT space since 2021, especially in the US. Some of these investments include Genies, Royal, and Venly.
It has been investing heavily in the blockchain gaming sector since the beginning of 2022. It participated in Seed rounds to Joyride ($14M), a Web3 platform for game creators, and Azra Games ($15M), a blockchain-based developer of collectible combat role-playing games, in H1’22.
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