Crypto VC, the Initiative behind the Web3 Industry
A focus on crypto VCs in the Asia-Pacific region
TL;DR
Crypto VCs are a key part of the Web3 industry. They provide capital and business support for many early-stage Web3 projects.
While the Web3 industry is inherently cross-border, we have seen a concentration of crypto VC activity centered on the North American market. However, there has been a recent increase in interest in the APAC region
While the Web3 industry is currently dominated by North America-centric Web3 projects, a number of crypto VCs are pioneering the APAC market, which is expected to bring regional diversity to the industry in the future.
Crypto VC, the initiative behind the dynamic Web3 industry
Given the dynamics and rapid pace in the Web3 market, crypto venture firms (VCs) play a crucial role in the overall development of the new-born industry. VCs are more than simple capital providers. They act as catalysts for innovation, providing capital and business support to projects that are still in the natal stage to fuel their growth. In addition, crypto VCs understand the challenges and opportunities that projects commonly face and can provide expertise and insights to overcome them. This makes crypto VCs an integral part of the Web3 industry.
The North American region: a focal point for crypto VCs
Leading crypto VCs are actively investing regardless of borders and geographies. This global investment strategy is in line with the cross-border nature of the Web3 industry. Nevertheless, there are clear differences in the geographical distribution of crypto VCs, with North America being the most concentrated region for crypto VC activity. While the growth those VCs have brought to the overall Web3 industry is undeniable, the fact that they are concentrated in only certain regions leaves something to be desired.
Out of the top 10 global crypto VCs as of 2023, 8 out of 10 are based in the US. They also account for an overwhelming 60% of all crypto funds or 50 billion USD. The projects they invest in are also heavily skewed toward North America, which is a natural result of the concentration of investment in geographically close and culturally familiar projects.
Asia Pacific: A new crypto VC hub
In addition to the United States, the Asia Pacific (APAC) region has recently emerged as a new center of crypto VC activity. The region's 1) economic growth, 2) technological innovation, and 3) crypto-friendly regulations have made it an attractive destination for crypto VCs. Local crypto VCs based in the region are also not to be ignored, with APAC accounting for approximately 22 billion USD in funding, or 25.6% of the total. Major APAC-based players such as Binance Labs, Animoca Brands, and Hashed are leading the charge with active investment activity. The frequency and volume of their investment are among the highest in the world. This data indicates that APAC-based crypto VCs are just as eager and active as their US counterparts.
Regional crypto VC in the Asia Pacific
The top 80 list of crypto VCs based in the APAC region by deal count shows the most active investment activity in 1) Singapore, 2) Hong Kong, and 3) China. Singapore and Hong Kong have maintained their status as financial hubs in the crypto market, while China has also recorded a high number of investments. This is likely related to the size of their economies, along with governments’ positive stance towards Web3 companies and the regulatory environment surrounding them.
Some regions show disappointing results. Japan-based crypto VCs account for only 40 investments, which is low compared to other countries in the APAC region. Southeast Asia, one of the most enthusiastic regions for crypto, is also underrepresented, which is discouraging given the potential of the region's Web3 industry. In particular, Indonesia has a low investment frequency and volume relative to the size and potential of its market. It has not fully capitalized on the growth potential of the Web3 industry in the region. However, the data does not reflect crypto VCs that execute investments in the name of individual executives or equity capital without fund organization, which may cause discrepancies in the data.
Crypto VC investment flows in Asia Pacific
Crypto VC investment activity in the APAC region looks to remain strong in the coming years. According to CB Insights' "2022 Global Blockchain Investment Trends" report, investment flows into APAC are on the rise. Hong Kong is especially expected to be a hotbed of activity for regional crypto VCs and investment, due to the government's crypto-friendly regulatory stance. CMCC Global, a Hong Kong-based crypto VC, has announced plans to raise a 100 million USD fund called the “Titan Fund” to invest in Hong Kong-based Web3 projects. In addition, CoinFund, a U.S.-based crypto VC, has begun hiring Hong Kong workers and is showing a high interest in the Hong Kong market.
It's also worth noting that Japan-based crypto VCs, while somewhat underrepresented so far, are also expected to make an impact going forward. This is because the Japanese government has recently demonstrated an open attitude towards Web3 and is actively encouraging the development of the industry. The Japanese government has even allowed startups to raise funds through crypto, so it is expected that Japanese crypto VCs will continue to invest heavily in the future, and external investment capital will flow in.
In addition to this, investment in Southwest Asia and India is also expected to grow. One example is Hashed is pioneering the Indian market. The company has established 'Hashed Emergent' and is actively investing in the Indian market, with the scale confirmed to be about 512 billion KRW (approx. 39.3 million USD). As such, crypto VCs are actively involved in various parts of the APAC region, with several North America-based crypto VCs also showing interest.
Conclusion
While North America continues to be the dominant crypto VC activity, we are seeing a growing number of crypto VCs with Web3 initiatives in the APAC region. Even as the crypto winter continues, several APAC-based crypto VCs have been active as of late, most notably Hashed, NGC Ventures, Hashkey Capital, and Signum Capital. The participation of North American-based crypto VCs in the APAC market has also expanded, as they have recognized the market potential of the APAC market. Thus, while the Web3 industry is currently dominated by North America-centric Web3 projects, their participation in the APAC market is expected to bring regional diversity to the industry in the future.
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