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VC Fund Eyes Chainalysis, Animoca Brands and Other Cash-Strapped Crypto Startups

Last Updated December 11, 2023 1:20 PM
James Morales
Last Updated December 11, 2023 1:20 PM

Key Takeaways

  • Crypto startup fundraising has slowed significantly in 2023.
  • The venture fund C1 is looking to take advantage of the funding drought to invest in crypto companies on the cheap.
  • According to reports, C1 is eying up crypto firms including Animoca Brands and Chainalysis.

In 2023, high interest rates and persistent inflation concerns have seen venture capital (VC) investors pull back significantly. As the flow of investment has dried up, many startups have been forced to accept down rounds. Joining major FinTechs like Revolut and  Stripe, crypto firms including Blockchain.com and Worldcoin have raised capital at a lower rate this year.

Although a recent market rally has seen fundraising pick up somewhat, the long-running VC drought continues to present an opportunity for investors. Among them, Crypto 1 hopes to secure discounts of up to 80% as it targets struggling Web3 startups like Animoca Brands and Chainalysis. 

Opportunistic Secondary Fund on the Hunt for Crypto Bargains

Launched in March this year, C1 is a $500M investment fund with a remit to capitalize on opportunities in the secondary market for digital asset companies.

A C1 pitch deck cited  by The Australian Financial Review said: “Due to current market conditions in the public and private markets, hyperinflation and rising interest rates we believe the digital assets market offers very attractive valuations in the secondary market.” 

In other words, the fund has its eyes on startups that generated multi-billion dollar price tags during previous Web3 investment sprees but still need additional capital to see them through to profitability.

According to the Review, the Web3 gaming startup Animoca Brands – owners of The Sandbox (SAND) metaverse game –  and blockchain analytics firm Chainalysis are among the companies on the fund’s radar.

Animoca and Chainalysis Facing Devaluation

During its last funding round  Animoca Brands was valued at $5.9 billion, while Chainalysis last raised capital at an $8.6 billion valuation. Despite both firms raising significant sums last year, C1 is apparently looking to snap up shares at a significant markdown. 

According to the report, the fund has offered to buy Animoca Brands shares at $1.12 AUS – just a quarter of their price in 2022, when investors paid 4.5 Australian dollars per share. 

Meanwhile, C1 could potentially acquire a $30 million stake in Chainalysis that would price the company at just 27% of its previous valuation.

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