Crypto investments hit a 2-year low at the end of 2022

Venture capital investment in cryptocurrency startups hit a two-year low in the fourth quarter of 2022, capping a year of dramatic change from start to finish.

Investments in cryptocurrency startups in the fourth quarter of last year totaled less than $3 billion in fewer than 400 deals, the lowest in both metrics since the fourth quarter of 2020, according to a new report from Galaxy Digital. did.

The decline capped a year that began with a record number of deals and capital flooding the space in the first quarter of this year, raising about $13 billion from start-ups.

Funding in the first half of the year was driven by key players with new funding from 2021, including key players like Andreessen Horowitz, Jump Capital, Ribbit Capital and Haun Ventures.

Coinbase Ventures, Animoca Brands, Jump Capital, GSR Capital, and now-bankrupt Alameda Research were among the most active venture investors by deal count.

Number of Crypto VC Transactions and Investment Capital

Number of Crypto VC Transactions and Investment Capital

Alex Thorn, Head of Research at Galaxy Digital, said:

US-based cryptocurrency startups continued to dominate venture investment in this space, accounting for more than 40% of all deals during the year.

Alameda has invested $3.2 billion in equity and token investments in startups, according to its 2023 outlook for digital assets gleaned from a spreadsheet shared by The Block Research with the Financial Times.

Valuations across the broader VC market rose slightly in the fourth quarter and cryptocurrency prices fell, even as overall venture capital deal volumes declined year-on-year.

The report also found that crypto-trading-focused startups accounted for the majority of venture funding, with so-called “web3” companies, ranging from NFTs and metaverses to blockchain games, making the second round of deals. It accounted for the largest portion of funding in terms of numbers — half of the year, accounting for 41% and 31% of deals in Q3 and Q4, respectively.

VC money investment amount by categoryVC money investment amount by category

VC money investment amount by category

In a separate year-end report, crypto data platform Messari noted that VC investment in early-stage crypto companies slowed in the second half of the year, adding that “dry powder in late-stage crypto trading has declined. “There are.”

“Companies that raise money in 2021 and 2022, if they’re smart, should come a long way…but only many founders will make the necessary adjustments to survive beyond that.” I’m not sure,” said Messari co. -Founder and CEO.

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