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Coinbase Ventures has shifted focus to crypto startups outside the United States amid growing regulatory scrutiny in the country.
Hoolie Tejwani, the director of corporate development and ventures at Coinbase, told Bloomberg in a recent interview that the company is now backing startups based in India, Singapore, Australia, and the UK.
“We are seeing some companies and founders who have great ideas, and they’re saying, ‘OK, I need to extract the US from my business plan and not serve US customers,’ which is a shame,” he said.
Tejwani emphasized that Coinbase Ventures is actively deploying capital and has made over 50 investments in 15 countries in the past year.
Coinbase Ventures Sees Decline in Investments
Coinbase has been a prominent investor in the cryptocurrency industry, holding the record for the highest number of deals with industry startups, according to data from PitchBook.
However, in recent months, Coinbase’s investing activity has experienced a decline.
This decline is part of a broader trend of reduced investment in crypto companies, especially among corporate venture capital arms.
While overall crypto venture funding dropped by 63% to $2 billion in the third quarter compared to the same period last year, corporate VC businesses made even more significant cutbacks, as noted by PitchBook crypto analyst Robert Le.
The decrease in investment, coupled with a shift towards making smaller bets, reflects a more cautious approach from corporate investors who aim to conserve cash and focus on their core businesses.
Regulatory scrutiny of the crypto industry has also played a role in shaping Coinbase Ventures’ investment strategy.
Binance and Kraken Reassess Investment Strategies
Other major players in the crypto industry, like Kraken Ventures and Binance Labs, have also reassessed their investment strategies.
Kraken Ventures, the venture arm of crypto exchange Kraken, has seen a decline in its deal count but remains actively involved in making investments.
“Over the last two years, we typically do about three to four new deals a quarter and deploy about $3 million in capital,” Gath said.
He also noted the importance of startups with real products and revenue, as well as the need for thorough due diligence when selecting investment opportunities.
Meanwhile, Binance Labs, the venture arm of Binance, the world’s largest crypto exchange, continues to invest in crypto projects despite regulatory setbacks.
“We are more proactively looking for founders,” said Dana Hou, who oversees business strategy and operations for the division.
“It’s easier to find builders who are more committed to the industry.”
As reported, VC funding in October declined 10% month-on-month, with only 75 investment projects recorded compared to 83 projects in September 2023.
Furthermore, this reflects a significant year-on-year decrease of 45% compared to the 135 projects reported in October 2022.
In terms of investment allocation, infrastructure projects received the largest share of funding, accounting for approximately 24% of the total, followed by decentralized finance (DeFi) at 21%, centralized finance (CeFi) at 9%, and non-fungible tokens/GameFi at 13%.