Disclaimer: Information found on CryptoreNews is those of writers quoted. It does not represent the opinions of CryptoreNews on whether to sell, buy or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk.
CryptoreNews covers fintech, blockchain and Bitcoin bringing you the latest crypto news and analyses on the future of money.
Recent findings from the crypto market intelligence company Messari indicate that crypto fundraising in the third quarter of 2023 has fallen to levels reminiscent of the last quarter of 2020.
The State of Crypto Fundraising report highlights that the previous quarter experienced significant declines in both funding totals and the number of deals. Overall funding for Q3 was below $2.1 billion across 297 transactions, reflecting a 36% drop in both metrics compared to Q2 2023.
Q3 Crypto Funding Declined to 2020 Levels
Researchers at Messari discovered that most of the transactions in Q3 were focused on early-stage funding rounds, including pre-seed, seed, and series A investments. Seed funding represented the largest category, with approximately $488 million raised across 98 rounds.
Early-stage deals increased their share to 48% in Q3 2023, up from 37% in Q4 2020, while later-stage deals, such as Series B and others, fell to 1.4% from 8% during the same timeframe. Messari observed that this trend indicates a strategic positioning by investors in a bear market, as they seek to finance projects that could yield higher returns when the crypto market recovers.
Related Posts
Importantly, there has been a noticeable shift among investors from later-stage projects to early-stage initiatives over the past three years, as reflected in the distribution of deals across different stages in Q3.
Moreover, strategic funding rounds have been on the rise during the bear market, with substantial contributions from corporate and private equity investments. The share of total funding for strategic deals increased to 22% in Q3 2023 from 0.2% in Q4 2021, indicating that challenging market conditions are prompting projects to secure short-term bridge funding or to be acquired by larger entities.
DeFi and Gaming Among the Most Funded Sectors in Q3
In terms of sector funding, chain infrastructure, gaming, and decentralized finance (DeFi) were identified as the most funded areas in Q3. Chain infrastructure captured the largest portion of capital at 18%, while DeFi had the highest number of deals, and the gaming sector attracted around $250 million in investments.
“The services sector, characterized by complementary business functions such as marketing, incubators, security, and legal services, was the only other sector to average over $100 million in funding over the past year. While other sectors play a crucial role in the overall growth of the crypto industry, these four sectors continue to draw the majority of investor interest,” Messari stated. Investors are strategically positioning themselves for the bull market by concentrating on projects that can yield higher profits.
SPECIAL OFFER (Sponsored) Binance Free $100 (Exclusive): Use this link to register and receive $100 free and 10% off fees on Binance Futures first month (terms).
PrimeXBT Special Offer: Use this link to register & enter CRYPTOPOTATO50 code to receive up to $7,000 on your deposits.
