Cryptocurrency VC funding plummeted in 2023, down 68% from the previous year.
In 2023, venture capitalists invested $10.7 billion in cryptocurrency and blockchain startups, a 68% decrease from the $33.3 billion invested in 2022.
Most of these investments were made in the first half of the year, with a decline in the second half of the year. But funding increased in November. In particular, in 2023, the proportion of deals allocated to Pre-Seed, Seed, and Series A startups increased, while mid- and late-stage deals decreased compared to the previous year.
In terms of verticals, NFTs/gaming, infrastructure, and web3 maintained their lead in terms of number of transactions, while other categories such as data, transactions, and enterprises had lower number of transactions. Here is a brief summary of cryptocurrency funding in 2023:
Total investment amount
While 2023 ranked as the third-highest year in terms of total investment volume, it was well below the unprecedented levels reached in 2022, the largest year for cryptocurrency VC funding to date.
“Given the macroeconomic environment, regulatory uncertainty, and the scarring from recent major cryptocurrency failures, we expected a significant decline in cryptocurrency funding in 2023,” Abhishek Saxena, senior director at Polygon Ventures, told The Block. “However, most investors and founders are still surprised by the intensity of the funding pullback. This funding winter has served as a healthy and necessary adjustment, allowing the industry to take stock and refocus on important priorities.” Saxena added.
Despite the economic slowdown in 2023, total investment this year still surpasses previous bear markets. $6.4 billion was invested in 2019-20, which is significantly less than this year’s funding.
Number of transactions and investment by stage
The number of cryptocurrency VC deals also slowed in 2023. There were 1,819 transactions that year, 32% fewer than the 2,671 in 2022. Overall, the number of transactions in 2023 continued to be higher than monthly transactions in 2020 and remained similar to the number of transactions in previous years. Number of transactions in 2021.
Looking at investment allocation by stage, the majority of funds in 2023 went to Pre-seed, Seed, and Pre-Series A startups, while mid- and late-stage startups showed less activity, reflecting the trend observed in 2022.
Investment by sector and category
In 2023, investment in NFTs and games continued to be active, and infrastructure and Web3 also received great attention. Fund distribution by industry appeared to have become more diverse compared to previous years.
Going forward, cryptocurrency VCs expect a surge in funding and trading in 2024 in line with recent price movements and expected bullish trends in the cryptocurrency market.
Disclaimer: The Block is an independent media outlet delivering news, research and data. As of November 2023, Foresight Ventures is a majority investor in The Block. Foresight Ventures invests in other companies in the cryptocurrency space. Cryptocurrency exchange Bitget is an anchor LP of Foresight Ventures. The Block continues to operate independently to provide objective, impactful and timely information about the cryptocurrency industry. Below are our current financial disclosures.
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