Google invests $1.56 billion in blockchain companies

Do you think of Google as a “Web3” company? No? Well, at least in terms of their investment portfolio, they’re pretty deep into blockchain and crypto just based on the investment rounds they were in.

Blockdata, a crypto research firm, released an updated blog posts Tuesday shows who have been the most active investors in the crypto scene from September 2021 to June 2022. Researchers noticed that major technology firms including Tencent, Microsoft, PayPal, Samsung and Alphabet (Google) are putting big money into crypto companies and startups.

Some of these companies, such as PayPalhas been a long-time and vocal supporter of blockchain technology (thanks in part to its co-founder Peter Thiel). Still others, like Google, have been much more subdued. Earlier this year, CEO Sundar Pichai told the investors they definitely looked at blockchain, it’s such an interesting and powerful technology with wide applications. The Google CEO further said that it plans to allow blockchain-based businesses to use cloud computing and wants to incorporate NFTs and crypto payments into its various platforms. Yet – so far this year – we have seen no sign of any public blockchain projects, despite creating a new blockchain group last January.

What Google chooses to invest in can help answer where the company wants to see blockchain technology go, or what it might want to incorporate into its own technological infrastructure. In the report, Alphabet, the parent company of Google, sat at the top of the pile, showing that it had been involved in some of the biggest crypto company investments in the past year.

Google took issue with how the report was structured, saying the numbers were inaccurate since they only pointed to the total size of the individual funding rounds, rather than Google’s contribution in each round. In an emailed statement, a Google spokesperson said: “As the report says, while the small number of Blockchain-related companies we’ve invested in have raised $1.5 billion, we’ve only invested a small fraction of that ourselves.”

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So while Google’s full contribution is less than the report likes to conflate, they’re still investing Blockchain technology. Some of the company’s pooled funds went to the likes of Dapper Labs, the company behind NBAs Top shot and UFC strike licensed video NFTs. The company was also behind CryptoKitties, an NFT-based game that has seen the price of its products tank. Dapper said they are meeking their own Flow blockchain systems with their Google cloud infrastructure.

What makes this more complicated is that there are actually two of Google’s investment arms involved in this fundraising. GV (Google’s invest arm once called Google Ventures) helped fund Dapper Labs and another crypto infrastructure company Voltage, which got 6 million dollars in total investments at the start of 2022. CapitalG, the company’s independent private equity firm, had a hand in the $550 million raised by Fire blocka crypto custody company, as well as investments with digital currency risk capital the company Digital Currency Group

Of course, this was all before the recent crypto crash, which has seen a number of once strong crypto companies layoff thousands of workers. Several crypto exchanges proved to be unreliable as they restricted users from withdraw their money, fearing that they would lose all liquidity. Another of Google’s investments, Digital Currency Group, apparently had a $1.2 billion claim against Three Arrows Capital, according to Bloomberg citing anonymous sources familiar with the proceedings. If you don’t know, Three Arrows Capital collapsed and was ordered to wind down back in June, taking many beleaguered crypto companies with it.

A representative from GV declined to comment on how they make investment decisions.

Although this isn’t the first time we’ve heard of Google’s parent company Alphabet with their heavy financial interest in blockchain companies. They have been investing in this technology since 2016, according to the Blockdata report. Previously reports showed that they had put money into crypto companies like Ripple (which just like many small altcoins since the recent crypto crash, It’s not too hot). Google had previously made much broader investments across a wider range of blockchain-based companies.

That was then, and this is now. Blockdata analysts said this limited investment slate is an attempt to make concentrated bets on a small set of companies, but even with executives’ stated hopes for blockchain technology, it’s hard to see any investment really panning out.

Although it was fourth in the size of its contributions, Samsung led the pack in the number – and eye-popping variety – of crypto ventures that made it count over an incredible 13 investment rounds. A total of $979.26 million went to the likes of Dank Bank, an NFT platform to try to monetize “memes and other iconic moments in internet history.” They put more of their money behind Yuga Labs, the creators of the Bored Ape Yacht Club NFTS. They dropped the investment in March, but by April there were users on the group’s official Instagram and Discord scammed of nearly $13.7 million in NFTs. Still, the founders said that many of BAYC’s rather odd initiatives such as a Bored Ape “Metaverse” is still going full blast.

They also invested in Sky Mavis, the creators of the crypto-based play-to-earn game Axie Infinity. That investment probably didn’t do them any good considering its iconic bridge was suffering one of the biggest hacks in crypto history earlier this year. The game has struggled to recover from that blow, even if the players had has already left the platform before hackers intercepted bridge funds.

Not all investments are going to pan out, of course. Massive companies’ diversified investment portfolios are just like any other gambling, and they must consider risk and reward. Blockdata’s research shows that 81 of the top 100 public companies have made some form of past or present crypto investment. 2021 saw the absolute highest amount of total investment in blockchain companies. The financing sums have increased by a factor of 14 from 2019 to last year.

In a blog post earlier this year, Samsung Next explained why it invested so heavily in Web3 and blockchain projects. The spoke up how Yuga Labs’ community is hyping their own product to increase the value of their NFTs, further stating that digital identities are transforming from self-identification to “pseudonymous identities” represented by NFTs. As for Axie Infinity, the investment arm the tribute its “play to earn” model that “not only facilitates player monetization, it has the potential to enable the use of token-based characters across different games.”

Samsung Next did not immediately respond to Gizmodo’s request for comment on what it is looking for in a blockchain-based project.

Updated 17.08.22 at 4:55 PM ET with commentary and investment clarification from Google