Follow Us

Crypto Industry Funding in Last Quarter Drops to 2020 Levels: Report

Share on facebook
Share on twitter
Share on linkedin

Share

Crypto Industry Funding in Last Quarter Drops to 2020 Levels: Report
Share on facebook
Share on twitter
Share on linkedin

The broader cryptocurrency market is witnessing a tough phase since the end of 2021. Though the crypto market attained its highest point during the year with the start of 2022, the trend saw a reversal and it resulted in crypto winter. It continues to date and is affecting the new funding in the industry as well. A recent report suggests that the fundraisings recorded in the recent quarter were the lowest since 2020. 

Market intelligence firm, Messari, brought a report on “State of Crypto Funding” on October 5, 2023. The report stated that the last quarter, that is the third quarter of 2023 ended on September 30, saw the lowest points in terms of invested amount and round of funding. 

The total funding for the third quarter (Q3) amounted to just under $2.1 Billion, spread across 297 deals. This data signals a significant 36% decline in both funding amount and deal count when compared to the figures from the preceding quarter Q2 2023. This decline reflects fluctuations and changes in investment activity within the relevant period.

Researchers from Messari have noted that the majority of deals in the third quarter (Q3) were focused on early-stage funding rounds, including pre-seed, seed, and series A investments. Seed funding emerged as the most substantial category with approximately $488 Million raised through 98 funding rounds. 

The data highlights a prevalent emphasis on early-stage development and investment in the cryptocurrency and blockchain space during that period.

In Q3 2023, early-stage deals expanded to capture a 48% share of total deals, marking a notable increase from their 37% share in Q4 2020. Conversely, later-stage deals, including Series B and other rounds, saw a significant decrease, dwindling to just 1.4% from 8% in the same period. 

Messari’s observation of this trend suggests a strategic positioning by investors, possibly indicative of a bearish market sentiment. Investors seem to be directing their funds towards projects they believe have the potential to yield substantial returns when the overall crypto market sentiment turns more positive.

A noteworthy trend over the last three years has been the shift of investor focus from later-stage projects to early-stage ones. This shift is evident in the allocation of the number of deals to each stage during Q3. The increased interest and investment in early-stage projects reflect evolving investor strategies and preferences in the ever-changing landscape of the cryptocurrency and blockchain industry.

In the midst of the bear market, there has been a noticeable increase in strategic funding deals, with significant contributions coming from corporate and private equity investments. The total funding share allocated to strategic deals surged to 22% during Q3 2023, a substantial rise from the mere 0.2% per share seen in Q4 2021. 

This shift suggests that the challenging market conditions are leading projects to seek short-term bridge rounds or explore opportunities for acquisition by larger projects as a strategic response to the unfavorable market environment.

In Q3, the cryptocurrency and blockchain space witnessed sector funding concentrated in several key areas. The chain infrastructure sector secured the largest share of capital, accounting for 18% of the total funding. Meanwhile, the decentralized finance (DeFi) sector stood out with the highest number of deals. 

Additionally, the gaming sector received substantial attention and investments, with approximately $250 Million allocated to it. These findings underscore the diverse range of sectors within the crypto and blockchain industry and the allocation of funding based on their specific characteristics and opportunities.

Leave a Reply

Your email address will not be published. Required fields are marked *

Download our App for getting faster updates at your fingertips.

en_badge_web_generic.b07819ff-300x116-1

We Recommend

Top Rated Cryptocurrency Exchange

-
00:00
00:00
Update Required Flash plugin
-
00:00
00:00