Crypto VC funding has dropped to a 3-year low as market turmoil continues
Amid the ongoing bear market, startup funding in the crypto industry has fallen to Q4 2020 levels.
According to a report released by blockchain analytics firm Messari on October 5, crypto startups raised a total of $2.1 billion in 297 deals in Q3 2023, down 36% from the previous quarter and nearly 70% from Q3 2022.
Seed funds covered the largest fundraising category, raising $488 million across more than 98 deals. “Trends in interest counts show a significant shift from late-stage projects to early-stage projects over the past three years,” the researchers wrote. Less than 1.4% of deals involved companies in the Series B round or later.
Meanwhile, strategic financing rounds rose from 0.2% to more than 22% of total deals in Q4 2021. The highest private equity round of the quarter was a $200 million investment from Family Office in UAE-based Islamic Coin. Alpha Blue Ocean ABO Digital. Masri said:
“Difficult market conditions will force projects to raise short-term bridge rounds or eventually be bought out by larger projects.”
Despite regulatory uncertainty, 54% of all active venture capital investors come from the United States, more than the rest of the world combined. Investor appetite has also shifted from user-facing applications to blockchain infrastructure, with the latter consistently outpacing the former in funding over the past three months.
“However, this trend may not last long as more investors begin to realize that if user-facing crypto applications fail, infrastructure investments are less likely to generate the returns they seek,” the researchers wrote.
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