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Today, we are excited to share a new article about The Dip in Crypto VC Funding!. Be sure to follow Bitrue's Official Twitter and Telegram to stay updated!
Introduction
The landscape of venture capital funding in the crypto realm witnessed a substantial nosedive, plummeting by 68% to a total of $10.7 billion compared to the whopping $33.3 billion invested in 2022. Despite this significant decline, 2023’s investment still surpasses the figures of previous bear markets, outstripping the $6.4 billion invested in both 2019 and 2020.
Read More: The Enigmatic Decline of Stablecoins Amidst Crypto Market Frenzy
Yearly Overview: Deal Counts and Funding Distribution
The bulk of the investments in 2023 primarily occurred in the first half of the year, witnessing a subsequent decrease in the latter part. However, November saw a slight resurgence in funding activities. Interestingly, the proportion of investments directed towards pre-seed, seed, and Series A startups increased, while mid and later-stage deals witnessed a decline compared to the previous year.
Sectoral Shifts and Dominance
NFTs/gaming, infrastructure, and web3 continued their dominance in deal counts, maintaining their foothold as the primary verticals attracting investments. Conversely, sectors like data, trading, and enterprise witnessed a reduction in deals, reflecting a changing trend in investor preferences.
Insights and Projections
Abhishek Saxena, principal lead at Polygon Ventures, noted that the drastic drop in funding was expected due to macroeconomic uncertainties, regulatory concerns, and recent setbacks in the crypto space. This funding winter, albeit intense, has been viewed as a necessary correction, prompting the industry to reassess priorities and focus on essential aspects.
Although 2023 experienced a slowdown, the total investment still stands notably higher compared to previous bear markets, signifying the industry’s resilience despite challenging circumstances.
Outlook for 2024: Anticipated Resurgence
Crypto VCs foresee a potential surge in funding and deals in the coming year, aligning with recent market fluctuations and the anticipated bullish trends in the crypto markets. The shift in market dynamics and investor sentiments hints at a possible resurgence in funding activities as the industry recalibrates after the pullback witnessed in 2023.
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