Crypto VC funding dropped in 2023; however, the overall numbers are still in the top 3, with investors bullish about the industry’s future. The total funding for 2022 was $33.3 billion. That has slipped to $10.7 billion, with the majority of the investments coming in the first half of the year. Experts have said that the drop could be due to several factors, adding that the future will be less affected by how things have rolled out so far.
One of the reasons investments in 2023 remain in the top 3 is that prior to 2021, they were significantly less than $10 billion. It reached an all-time peak of $8.1 billion in 2018. The previous year attained the greatest recorded amount, which signifies the attainment of the $33.3 billion milestone.
Segments that dominated were NFT/gaming, Web3, and infrastructure. Segments that trailed were trading, data, and enterprise. Also, the majority of the investments have been made in select ventures—seed, pre-seed, and Series A startups. Not that others have been ignored; mid- and later-stage ventures have also secured reasonable funding.
Abhishek Saxena, the Principal Lead at Polygon Ventures, has said that the drop in crypto funding for 2023 was expected amid the prevailing macroeconomic conditions, regulatory uncertainty, and failures of certain crypto ventures. He has not named any crypto ventures but has added that investors and founders are surprised by the intensity with which funding has returned to the industry.
Abhishek acknowledged the funding winter, adding that it was vital to serve as a cause for the necessary rectification. This enabled the sector to reflect and refocus on essential goals.
The number of deals in 2023 has dropped as well. There were 1,819 deals on the table this year, as opposed to 2,671 deals the year before. This is a 32% decline, but monthly discounts have been maintained consistently. It is important to note that most of the funding happened in the first two quarters of 2023.
Moving forward, Crypto VCs expect a surge in funding activity—amount and number—in the next year, 2024. The assumption aligns with the current shift in the price and a movement toward a bullish trend. Both aspects are pretty evident by the fact that BTC and ETH are once again dominating the sphere with a price rise.
For instance, BTC has gained 12.93% in the last 30 days, touching a valuation of $42,677.75. The token is expected to rise further and touch its ATH by the end of 2024. Interestingly, the current exchange value has jumped 153.16% in the last year.
Similarly, ETH is up by 7.06% in the last 30 days and 83.31% in the last year, at a valuation of $2,234.82.
All the factors are hinting that the industry is gaining traction once again. Therefore, this will pave the way for a higher number of crypto VC funding activities.