Page 76 - Cyber Defense eMagazine April 2023

and commerce. As a result, it is a risky industry with wide tails and uneven rewards. In this situation, the
winner takes it all. VCs are always seeking 100x prospects, which carry extremely high risks. They keep
investing in blockchain and cryptocurrency firms because they are aware that the rewards will eventually
outweigh the dangers.

Simultaneously, the venture capital sector might be drastically altered by blockchain technology in a
variety of ways. For starters, it could be simpler for entrepreneurs to raise capital without using the
conventional VC procedure. The amount of money VCs spend in businesses and the fees they charge
may decline as a result of this.

In this blog, we will discuss what is drawing the attention of VC firms toward blockchain technology, how
large-scale flocking of the VC firms will take place in the third quarter of 2022 towards blockchain start-
ups, and why the VC firms supporting these crypto companies.

Benefits of venture capital funding for blockchain firms Several venture capital firms are continually
investing in blockchain businesses since they see great promise in the field. As a result, VC companies
are forging strategic partnerships with blockchain entrepreneurs and investing in the market to make
money. In turn, this has made this an advantageous sector for venture capital companies due to the
excitement around blockchain technology and the growing usage of cryptocurrencies.

There is now a high potential for growth and increasing demand for investments in blockchain firms. As
a result, blockchain venture capital companies are making investments in the sector to make money.
Several factors make the sector profitable for investors, including the ones listed below:

• The potential for blockchain to expand is enormous. For instance, in 2013, Coinbase received
$20 million from renowned VC firm Andreessen Horowitz. The same is currently valued at $12B
in 2023. Investors are seeking growth prospects like this. This demonstrates that the sector is
rapidly expanding and has a lot of room for growth.
• The advent of blockchain technology has changed the internet as people know it, and Web3 is
the wave of the future. Several firms are now using blockchain to create decentralized apps. This
future is getting closer because of the industry's development and expansion. Venture capital
firms have invested in this technology due to the industry buzz.
• Blockchain investment is a desirable investment choice due to its flexibility. Blockchain venture
capital financing is particularly attractive since a crucial component of the fundraising process
involves the exchange of NFT tokens rather than shares. Venture investors thus perceive the

blockchain business as having possibilities for investment.

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