Venture funding for crypto startups declined for two straight quarters for the first time since 2018.
According to new research, venture funding for crypto businesses fell this quarter by around 35% to $6.2 billion, following a 22% reduction in Q2.
VC deals also experienced a substantial decline, falling by 22% quarter over quarter. Even said, investment for infrastructure companies is still not at pre-2021 levels, and they are still growing quickly at the seed stage.
Prior to this time, the sector had grown for seven consecutive quarters as venture capitalists continued to pour money into it. The sector’s funding has decreased, as evidenced by the quarter-over-quarter decline in funding, and investors are no longer as willing to part with their money as they were during the euphoric bull market years of 2021.
The last time this type of decline occurred was in the second half of 2018, during a previous bear market, when the price of BTC, a crucial indicator of the overall health of the crypto industry, dropped to a low of under $4,000 from an all-time high of over $19,000 at the end of 2017.
The number of VC deals also sharply decreased by 22% quarter-on-quarter along with the amount of capital. Previously, the industry had seen an increase in deals for three straight quarters.
The deal flow in the mid to late stage appears to be particularly heavily struck by the current market circumstances. Last quarter, there was just one late-stage deal as opposed to 13 in Q2 – a 92% decrease. Mid-stage deals for startups were also difficult to come by, with investment down by about 63% and only 11 deals as opposed to Q2’s 30.
Despite this, infrastructure startups raising seed rounds climbed by about 24% even though every subsector saw a decrease in seed-stage deals. SettleMint and Tatum, two infrastructure companies, raised €16 million and $42 million in rounds, respectively, today.
The report notes that over the previous two quarters, investments totaled around $15.8 billion. That amount exceeds the whole amount of venture capital money raised by the industry between 2017 and 2020, which totaled $15.3 billion.
