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Crypto Venture Capital Investment Falls to Levels Last Seen in Q4 2020 as Bear Market Prevails
- 297 crypto firms secured $2.1 billion in Q3 2023, a decrease of 36% compared to Q2 2023.
- Only 1.4% of transactions involved companies raising a Series B or later.
As bearish market conditions persist, funding for startups in the cryptocurrency industry has fallen to levels not seen since Q4 2020. On October 5, blockchain analytics firm Messari reported that 297 crypto companies raised $2.1 billion in Q3 2023, marking a 36% decline from Q2 2023 and approximately 70% lower than Q3 2022. In total, $488 million was raised across 98 deals, predominantly from seed funding.
The analysts noted:
“Trends in deal counts show a significant shift away from later-stage projects and into early-stage projects over the last three years.”
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Only 1.4% of transactions involved firms raising a Series B or later. However, from Q4 2021 to Q3 2023, the share of deals financed through strategic funding rounds increased from 0.2% to over 22%. During this quarter, family office Alpha Blue Ocean’s ABO Digital invested $200 million in Islamic Coin, based in the UAE.
The United States accounted for 54% of all active venture capital investors, surpassing the total from the rest of the globe, despite ongoing regulatory challenges. Furthermore, investor interest has shifted from consumer-oriented applications to blockchain infrastructure, which has received significantly more funding in the past three months.
The analysts further stated:
“However, this trend may not last for long as more investors are beginning to realize that without successful user-facing crypto applications, infrastructure investments are less likely to generate their desired returns.”
Bitcoin (BTC) may be poised for a potentially favorable month in October, based on historical data. This period often brings bullish movements for BTC, instilling renewed optimism among investors following a challenging few months.
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