The Bay Area is the leading hub of venture funding in most areas. But not when it comes to startups focused on blockchain or cryptocurrency-related technologies.
Last year, about 46% of all the funding that went into cyrptocurrency startups in the U.S. went to those based in the New York City area, according to a report from venture data provider CB Insights. Those companies collectively raised $6.5 billion. The Bay Area,by contrast, was a distant No. 2; its cryptocurrency startups attracted $3.9 billion in 2021.
New York-based startups also dominated the list of those that raised the biggest funding rounds in the crytpocurrency sector. Of the top 10 biggest funding deals last year, six went to Big Apple companies, including the biggest of all, a $1 billion round raised in December by New York Digital Investment Group LLC., a bitcoin-focused alternative asset management company.
Meanwhile, just two of the 10 biggest rounds for cryptocurrency companies went to ones based in the Silicon Valley and San Francisco region.
It's no surprise New York has the lead when it comes to backing cryptocurrency and blockchain startups, said Chris Bendtsen, a senior analyst at CB Insights.
"New York City is the finance capital of the world," Bendtsen said. "Startups there have easy access to the biggest names in the finance industry and access to their talent. The new mayor, Eric Adams, has been an advocate and has said he wants New York City to be the center of the cryptocurrency industry."
Last year, the total amount of venture capital invested in cryptocurrency and blockchain startups soared by more than 700% to $25.2 billion, according to CB Insights. U.S.-based companies raked in $14.1 billion of that total.
Around the world, cryptocurrency startups collectively raised 59 rounds of $100 million or greater in 2021. Of those, just eight went to Bay Area companies. You can see the startups that raised those rounds in the gallery below.
Biggest Bay Area cryto startup fundings
The most active cryptocurrency investors are based in the Bay Area
Six of those local startups last year reached valuations of $1 billion or larger. Three of the companies that made the Bay Area's cryptocurrency megarounds list scored their big investments as part of a Series A round.
Despite New York startups winning the lion's share of cryptocurrency and blockchain investments, the three most active investors in the sector are either based in the Bay Area or have a strong tie here.
No. 1 was Coinbase Ventures with 68 deals last year, according to CB Insights. Based in San Francisco, the outfit is the investment wing of Coinbase Global Inc. (Nasdaq:COIN), the cryptocurrency exchange operator.
China-based AU21, which has offices in San Francisco, ranked No. 2 with 51 deals.
Andreessen Horowitz, which has increasingly focused on cryptocurrency startups, was the third most active investor in the sector. The Menlo Park venture firm invested in 46 such deals.
Farther down the list, Pantera Capital of Menlo Park ranked No. 10 with 28 deals.
Venture investment in the sector likely won't fall back this year to previous levels, Bendtsen said.
"More consumers are using crypto exchanges and products," he said. "That led institutions to try to take advantage, which led venture firms to realize this was a 'don't miss the boat' situation."
