According to Galaxy Research, investment firms spent over $30 billion in Web3 and crypto companies in 2022, however, it also cautions crypto researchers and firms that funding may be more difficult this year.
In a Jan. 5 report, Alex Thorn, Galaxy’s director of firmwide research said macroeconomic and crypto market circumstances caused investment drawdowns in Q3 and Q4. This will continue until macro and crypto markets recover in 2023.
In 2022, there were 2,900 venture transactions, but the fourth quarter witnessed the fewest deals and the least cash spent in two years.
Crypto and Web3 startups may struggle to attract money in 2023 if this trend continues, Thorn said.
“The macro, monetary, and crypto asset environment portends a difficult year ahead for all involved.”
Declining firm values and tougher investor criteria will make funding harder for entrepreneurs.
In 2023, startups must concentrate on foundations, managing operating expenditures, and generating revenue.
The US regulatory climate will also have repercussions, given America leads crypto startups.
According to the research, more than 40% of crypto VC agreements last year featured U.S. startups.
“The continued importance of the U.S. to these markets, and its leading position, provide ample reason for U.S. policymakers to clarify and codify rules and regulations for the emerging space.”
Cyclical investor dispositions and crypto markets.
Google and Alphabet’s independent growth fund CapitalG managing partner Gene Frantz told Forbes last month that 2023 year-end headlines would be stronger than today’s.
“The current news cycle may be rough, but persistence and innovation combined with an improving economic outlook will restore the optimism that has always defined our [venture capital] industry.”
Crunchbase predicts decreased venture financing across all industries in 2023. Global venture financing plummeted 35% from 2021 to 2022, while the crypto industry remained healthy, presenting promise for 2023.
