Venture Capital Firms Raise $2.2 Billion for Crypto Startups, Betting on Innovation Despite Market Challenges

Recent data suggests that crypto VC funding has picked up, with crypto VCs raising over $2.2 billion in fresh capital via closed funds as of August 2024. Over the past weeks, six venture capitalists raised more than $500 million in funds.

Several funds are currently preparing for more fundraising, focusing on early-stage startups. This increase in funding suggests that venture capitalists remain bullish about the growth potential of novel projects.

Borderless Capital's DePIN Funds Show Strong Growth as Investors Bet on Crypto Infrastructure

According to data from PitchBook, cryptocurrency venture capital firms have raised over $2.2 billion through closed funds as of August this year. In the past few weeks, about six venture capital firms have raised over $500 million.

Some notable fundraising efforts include ParaFi Capital, which secured $120 million, and Borderless Capital, which raised $100 million. Hack VC trailed closely with $77 million, and Robot Ventures raised $75 million.

Several funds are currently in the process of raising additional capital this year. For Instance, Dragonfly Capital reportedly targets $500 million and has already achieved half of that goal.

Meanwhile, many venture capital funds are focused on early-stage startups, showing optimism about innovations despite current market challenges. A standout example is Borderless Capital's $100 million DePIN Fund III.

Decentralized Physical Infrastructure Networks (DePINs) use blockchains and token incentives to allow individuals to create decentralized networks, like GPU clusters.

Advocates of DePINS claim they provide more efficiency and lower costs than traditional Web2 systems. This makes them a promising era for investment in the crypto space.

Borderless Capital's journey with DePIN funds is particularly intriguing, as it has launched its third fund. In 2021, it raised the first DePIN fund, valued at $10 million. This fund focused solely on Helium's HNT Token and helped build its physical infrastructure.

The second DePIN fund, valued at $20 million, expanded significantly, investing in over 35 DePIN projects and generating more than double the invested capital.

A partner at Borderless Capital, Alvaro Gracia, said the jump to the $100 million third fund signifies substantial growth in the DePIN sector. Not only are more projects raising funds, but the funding rounds are getting larger.

DePIN Projects Poised for Growth: Gracia Highlights Market Independence and Unique Tokenomics

Gracia emphasized that the DePIN category matures with robust fundamentals and diverse applications across various industries. Moreover, he believes DePIN is unique within Web3 because its value comes from outside the crypto sector. This makes it able to resist bear markets.

According to Gracia, while the broader crypto market may decline, many DePIN projects will maintain strong fundamentals and continue to grow. Gracia used Helium as an example, noting that its revenue is largely independent of digital assets markets as subscribers pay for a mobile plan.

He also highlighted GEODNET, a decentralized RTK network for satellite navigation. GEODNET has already generated over$1.5 million in annual recurring revenue, which is not tied to crypto market fluctuations. Gracia is highly optimistic about the potential of the DePIN category.

A key feature that sets DePIN projects apart is their unique tokenomics design, which ties revenue generation to token value. Alvaro Gracia referred to this as a token value accrual mechanism."

In some projects, this mechanism involves strategies such as buy-back and burn, where a portion of the revenue is used to repurchase and destroy tokens, reducing the supply.

For example, GEODNET allocates 80 cents of every dollar in revenue to buy back and burn its tokens. This reduction in token supply can drive up the token's price, creating a feedback loop. As prices surge higher, it leads to higher infrastructure deployments, allowing participants to earn more by contributing to the network.

Gracia emphasized that DePIN projects build infrastructure and solve real-world problems. They are potentially disrupting Web2 industries.

Meanwhile, Borderless Capital plans to fully deploy its $100 million DePIN Fund III within the next four years. This reflects confidence in the sector's growth and long-term value.

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