The Current State of Crypto Startup Funding
In the ongoing crypto bear market, it’s not just the prices that are dropping; startup funding in the industry has taken a nosedive, reverting back to the depressing levels seen in Q4 2020. According to a recent report from blockchain analytics firm Messari, the total amount raised by crypto startups in Q3 2023 reached a mere $2.1 billion spread across 297 deals. That’s a staggering 36% decline compared to the previous quarter and a jaw-dropping nearly 70% drop from Q3 2022.
Seed Funding Takes the Lead
Amidst the gloom, seed funding has emerged as the unlikely hero, accounting for the lion’s share of fundraising. In Q3 2023, over 98 deals contributed to $488 million in seed funding. Researchers at Messari noted, “Trends in deal counts show a significant shift away from later-stage projects into early-stage ventures over the last three years.” Now, if you’re looking for a Series B project, you might have better luck finding Bigfoot.
Strategic Financing Rounds Surge
Hold onto your hats, because strategic financing rounds are experiencing a meteoric rise. From a paltry 0.2% of total deal share in Q4 2021, they’ve shot up to over 22% by Q3 2023. One of the standout rounds was a hefty $200 million investment into Islamic Coin, hailing from the United Arab Emirates, courtesy of Alpha Blue Ocean’s ABO Digital. Talk about a hefty paycheck!
The Impact of Market Conditions
Market conditions aren’t just shifting; they’re downright turbulent. Messari points out that the current landscape forces projects to either scramble for short-term bridge rounds or risk being swallowed whole by larger entities. And speaking of larger entities, let’s talk about where investment interest lies these days.
Geographical Trends and Investor Sentiment
Despite the murky waters created by regulatory uncertainty, 54% of all active venture capital investors are based in the United States, dwarfing their international counterparts. But wait, there’s a twist! Investors are leaning more towards blockchain infrastructure rather than user-facing applications. However, that trend could shift as experts note that without successful user-facing crypto applications, infrastructure investments may struggle to yield desirable returns.
Final Thoughts
So, what does all this mean moving forward? The decline in funding is a stark reminder that the crypto industry is in a transitional phase. Investors may want to keep an eye on innovative user-facing applications, lest they find themselves stranded on a deserted island of infrastructure projects with dwindling returns.
+ There are no comments
Add yours