Funding for blockchain start-ups topped $4 billion U.S. for the first time in the second quarter, despite a steep drop in cryptocurrency prices.
Companies in the cryptocurrency sector raised a record $4.38 billion U.S., according to data from analytics firm CB Insights, up more than 50% from the previous quarter and a nearly ninefold increase from the same period a year earlier.
Blockchain is the underlying technology behind most cryptocurrencies. It’s essentially a digital ledger of virtual currency transactions which is distributed across a global network of computers.
The largest financing round for a blockchain company in the second quarter was a $440 million U.S. investment in “Circle,” a payments and digital currency firm. Circle recently announced plans to go public through a $4.5 billion U.S. merger with a special purpose acquisition company (SPAC).
Ledger, which develops hardware wallets for people to store their digital currencies, attracted the second-biggest round in the quarter, raising $380 million U.S.
The record funding highlights how investors are finding alternative ways to gain exposure to the cryptocurrency industry, by acquiring stakes in private start-ups developing technology for digital currencies and the distributed networks that underpin them.
Venture investors appear unfazed by declining cryptocurrency prices. Bitcoin has more than halved in value since hitting an all-time high of nearly $65,000 in April, when U.S. cryptocurrency exchange Coinbase went public.
Ethereum, the world’s second-biggest digital coin, has also fallen over 50% since notching a record high of more than $4,000 in May.
Funding for financial technology (fintech) companies also hit a new record in the second quarter. According to CB Insights, fintech start-ups raised $30.8 billion U.S. in the second quarter, up 30% from the previous quarter and almost triple the amount raised by fintechs in the second quarter of 2020.
