Decline in Crypto VC Funding in 2023
In 2023, venture capital (VC) funding in the cryptocurrency ecosystem saw a significant decrease, with a 68% drop compared to the previous year.
This decline brought the total amount invested to over $10 billion, according to data from The Block Research, compared to approximately $33 billion in 2022 and $29 billion in 2021. Despite a dynamic start to the year in terms of investments, the decrease was observed following a slowdown in the second half, with a slight rebound in November.
A Decline in VC Funding in 2023
In 2023, venture capital (VC) funding in the cryptocurrency ecosystem saw a significant decrease, with a 68% drop compared to the previous year.
This decline brought the total amount invested to over $10 billion, according to data from The Block Research, compared to approximately $33 billion in 2022 and $29 billion in 2021. Despite a dynamic start to the year in terms of investments, the decrease was observed following a slowdown in the second half, with a slight rebound in November.
According to Abhishek Saxena, the Head of Polygon Ventures, the decrease in crypto fundraising in 2023 was widely anticipated, mainly due to an unstable macroeconomic and cryptographic environment.
“The significant decrease in cryptocurrency funding in 2023 was widely expected given the macroeconomic environment, regulatory uncertainty, and the scars left by recent major cryptocurrency failures,” said Abhishek Saxena.
In 2023, investments were mainly focused on early-stage startups such as pre-seed, seed, and Series A, with investments in later stages (Series B/C) decreasing.
As for the most funded blockchain narratives in 2023, they included the NFT/games sector, infrastructure, and web3. Among the most active investors were Binance Labs, Coinbase Ventures, and Animoca Brands.
An Increase in VC Funding in 2024?
Although the volume of funding significantly dropped in 2023, the total amount invested still exceeded previous downturns such as in 2019 and 2020, where investment amounted to $6.4 billion.
Experts, like Abhishek Saxena, consider this period of funding reduction as a healthy and necessary correction, allowing the industry to realign its priorities.
The outlook for 2024 is more optimistic, with expectations of a recovery in funding and transactions, in line with recent price changes and anticipated bullish trends in the cryptocurrency markets.
