Report: Crypto venture capital investment will decrease sharply in 2023, down 68% from the previous year

Author: Yogita Khatri, The Block; Compiled by: Songxue, Golden Finance

In 2023, venture capitalists injected $10.7 billion into cryptocurrency and blockchain startups, more than the amount invested in 2022 USD 33.3 billion decreased by 68%.

Most of these investments occurred in the first half of the year, with a decline in the second half, although investment increased in November. Notably, the proportion of investment allocated to pre-seed, seed, and Series A startups increased in 2023, while mid- and late-stage deals declined compared to the previous year.

In terms of industry verticals, NFT/games, infrastructure, and web3 maintain dominance in terms of number of transactions, while other categories such as data, transactions, and enterprise have smaller number of transactions. Here’s a brief review of cryptocurrency financing in 2023.

Total Investments

2023 was the third-highest year for total investment, although it was well below the unprecedented levels reached in 2022, the year that saw the most investment in crypto ventures so far The year with the most funding.

Abhishek Saxena, principal at Polygon Ventures, noted: “Given the macroeconomic environment, regulatory uncertainty, and the scars left by recent major cryptocurrency failures, crypto funding will decline significantly in 2023. Largely expected." "However, most investors and founders are still surprised by the intensity of the funding pullback. This funding winter was a healthy and necessary correction that allowed the industry to take stock and refocus on key priorities," Saxena  added.

Despite the economic slowdown in 2023, total investment for the year still exceeded the previous bear market. Investment in 2019-2020 was $6.4 billion, significantly less than this year’s funding.

Cryptocurrency in 2023 The number of venture capital deals has also slowed. A total of 1,819 transactions occurred during the year, a 32% decrease from 2022's 2,671 transactions. Overall, the number of transactions in 2023 continues to be higher than the number of monthly transactions in 2020 and close to the number of transactions in 2021.

From the perspective of stage investment distribution, most of the funds in 2023 will flow to pre-seed, seed round and pre-A round start-ups, while the activity of mid- to late-stage start-ups will be lower, which is consistent with the trend in 2022. echo.

By industry and category Divided Investment

In 2023, investment in NFTs and games remained strong, while infrastructure and web3 also attracted widespread attention. The distribution of the capital industry is more diversified than in previous years.

Looking ahead, crypto venture capital firms expect a surge in funding and deals in 2024, in line with recent price changes and expected bullish trends in the cryptocurrency market.