Crypto VC Funding Drops Sharply In 2023

Key Points:

• Crypto VC funding dropped sharply to $10.7 billion from the previous year’s $33.3 billion, marking a challenging year for the industry.
• First-half dominance of pre-seed, seed, and Series A investments overshadowed declines in mid- and late-stage deals.
• Despite economic challenges, 2023 showcased robust investment in NFTs, gaming, infrastructure, and Web3, indicating a diversified sectoral interest.

According to The Block data, crypto VC funding witnessed a substantial 68% drop, dwindling to $10.7 billion in 2023, a sharp contrast to the $33.3 billion invested the previous year.

Read more: VCs Steps Back, Crypto Funding Amount In June Hits Lowest In 2 Years: Report

Crypto VC Funding Landscape: 68% Plunge in 2023

Although the figures dipped, the total investment for 2023 managed to outshine the bear market of 2019–2020, which saw a total of $6.4 billion in investments.

The crypto VC funding landscape was characterized by a front-loaded first half of the year, experiencing a subsequent decline in the latter part. Notably, November saw a resurgence in investment activity. Intriguingly, the distribution of deals favored pre-seed, seed, and Series A startups in 2023, marking a shift from mid- and late-stage deals prevalent in the prior year.

While the economic slowdown impacted overall investment, the annual figures still surpassed those of the preceding bear market. A total of 1,819 crypto VC funding deals took place in 2023, marking a 32% reduction from the previous year’s 2,671 transactions.

In terms of sectoral distribution, 2023 witnessed a diversification of funds. NFTs and gaming sustained robust investment, joined by significant attention towards infrastructure and Web3. This departure from previous years indicates a dynamic investment landscape. Despite the challenges posed by the economic climate, the crypto space remains resilient, emphasizing a nuanced pattern of investment in emerging technologies and startups.

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