VC Crypto And Blockchain Funding Dipped In Q4 2022 – Blockdata Report
The cryptocurrency space experienced a challenging year in 2022, with a noticeable decline in venture capital funding for blockchain and crypto activities. Blockdata’s report indicates a continuous decrease in funding throughout 2022, following a booming venture capital investment in the broader Web3 sector in 2021.
Q4 2022 Witnessed Highest Drop In VC Funding
Blockdata analyzed data from CB Insights and found that the final quarter of 2022 saw a 34% decrease in venture capital funds for blockchain-related projects compared to Q3. This decline was even more significant when Q4’s funding dropped by 67% and 53% compared to Q1 and Q2, respectively.
The decrease in venture capital investment was evident every quarter after an all-time high of $11 billion in investments across 692 deals in the first four months of 2022. The report by Blockdata attributes the decline in crypto-related VC funding to several factors, including the $60 billion collapse of the Terra ecosystem in May 2022.
This event triggered the Celsius and Three Arrows Capital and Celsius’s bankruptcy. In November 2022, the collapse of FTX exacerbated the volatility in the industry.
Furthermore, the impact of global macroeconomic conditions, including inflation and rising interest rates on capital markets, also contributed to the decline in venture capital investments. Consequently, the last quarter of 2022 witnessed a significant decrease in venture capital funding for crypto and blockchain startups, with only $3.7 billion invested by VCs.
This represents a 61% decrease compared to the $9.6 billion invested in the same quarter in 2021. Overall, there was an 11% year-on-year reduction in total funding received by crypto and blockchain startups, falling from $32 billion to about $29 billion.
Furthermore, Blockdata noted a 35% surge in deals in 2022 compared to 2021. This is a positive development considering the crypto meltdown that occurred in 2022.
VC Investors Turn To Less Volatile Technologies
Blockdata stated that despite reducing venture capital expenditure, investors are still keen to finance blockchain-focused startups, technologies, and applications. According to the report, venture capital investments now focus on “non-volatile innovations.”
This includes digital identity management, asset management, payments and remittances, decentralized autonomous organizations, lending, and cross-blockchain bridges. Despite the FTX debacle, Q4 witnessed notable VC investments, with Amber Group securing the biggest funds.
The company successfully raised $300 million through a Series C round last December to address drawdowns in certain products. In Q4, nine “blockchain mega-rounds” occurred where firms raised over $100 million.
However, only two companies, Celestia and Uniswap, achieved unicorn status during this period, with valuations of $1 billion and $1.7 billion, respectively. According to recent findings, Coinbase Ventures emerged as a top corporate venture capital investor in the crypto and blockchain space in 2022.
It took part in 13 funding rounds for various startups in the industry.
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