Venture capital investments are the first to disappear in a down market for cryptocurrencies. This seems to be happening now, as market momentum has fallen and regulatory pressure on the sector has increased.
Venture Capital Firms Are Increasingly Cooling Off from the Crypto Sector
Compared to prior years, 2023 has seen fairly poor venture capital cryptocurrency investments. Some web3 startups continue to raise money from the shrinking pool, nevertheless.
Data Shows Falling Investment
According to Pitchbook data, only $2.34 billion was raised by crypto and web3 startups across 382 deals in Q2 2023. Since the first three months of 2022, when $12.14 billion was invested, this is the fifth quarter in which there have been declines.
On the other hand, on July 11, Bankless announced that statistics through to mid-May showed a 98% decrease in crypto VC fundraising from the previous year.
Fundraising is dismal, but hope is not lost. VCs have plenty of dry powder remaining to invest!
Bankless
The Block’s Data
Although The Block‘s data presents a slightly different image, the overall picture remains the same: 2023 will be a terrible year for crypto VC investing. According to the data, funding will likely be 64% lower in 2023 than it was in 2018.
Web3 and Cryptocurrency Projects Continue to Receive Capital
The highest decrease in investment has been observed in the financial services, NFTs, gaming, DeFi, trading, and analytics sectors. However, funds are still going into web3 and cryptocurrency projects. FlagshipFYI reports that, compared to May, 50 cryptocurrency projects raised money from venture capital firms in June.
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