It has been revealed that the amount of investment by cryptocurrency (virtual currency) venture capital (VC) in blockchain startups in 2023 fell 68% from $33.3 billion (approximately 4.8 trillion yen) in 2022 to $10.7 billion (approximately 1.5 trillion yen). This was reported by overseas cryptocurrency media The Block.
Most of the fundraising took place in the first half of last year. The amount of fundraising fell in the second half of the year, but increased in November. In particular, the proportion of deals allocated to pre-seed, seed, and Series A startups increased. Meanwhile, mid- and late-stage fundraising decreased compared to 2022.
The NFT, blockchain games, infrastructure, and Web 3.0 areas maintained their advantage in terms of fundraising, but fundraising decreased in the data, trading, and enterprise areas.
On the other hand, it was also the third highest year in terms of fundraising. 2022 was the year that entered the "cryptocurrency winter," but it seems that many VCs invested during the cryptocurrency slump, with fundraising reaching an all-time high.
Abhishek Saxena, lead principal at Polygon Ventures, said, "Given the macroeconomic environment, regulatory uncertainty, and the impact left by the collapse of crypto companies, we expected a significant contraction in crypto investments in 2023." "Most investors and entrepreneurs were surprised that VC funding dropped so much," he said.
He also said, "Fundraising returned to health in the winter of 2023, as the VC industry reassessed the status quo and refocused capital on key priorities."
▶︎Quote: The Block
Although fundraising itself slowed down last year, it still outperformed previous bear markets in terms of total annual investment. VC investments from 2019 to 2020 were $6.4 billion overall, but in 2023 they are expected to be $10.7 billion, which is roughly double the results.
In addition, the number of VC deals in the cryptocurrency space has slowed. There were 1,819 deals last year, down 32% compared to 2,671 in 2022. Overall, the number of deals last year exceeded the number of monthly deals in 2020 and remained close to 2021 levels.
In terms of investment allocation by stage last year, the majority flowed into pre-seed, seed, and pre-series A startups, while activity in mid- and later-stage startups has decreased.
▶︎Quote: The Block
VC investment in cryptocurrency has recovered since November. Expectations for the blockchain gaming sector, blockchain infrastructure, and NFTs are still ongoing, and expectations for a breakout are also high given the market conditions in the cryptocurrency market. In addition, the amount of investment in the trading sector is also showing an upward trend.
In addition, since it is expected that a Bitcoin spot ETF will be realized soon, we expect a sharp increase in fundraising and transactions with an eye on the future.
Reference:The Block
Image: Shutterstock
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