Crypto Company Funding Takes A Hit: VC Investments Drop 70% in One Year – Report


Crypto sector investments are facing increasing hesitation from venture capitalists due to a combination of ongoing controversies, market volatility, and uncertain regulatory conditions.

As a result of these challenges, funding has decreased as investors exercise prudence and look for more secure investment options elsewhere.

A recent research from RootData, an established provider of digital asset analytics, claims that over the past year, venture capital investments in the cryptocurrency business have significantly decreased by more than 70%.

Market participants and industry watchers are concerned since this fall represents a significant change in the investment environment within the cryptocurrency sector.

The industry for digital assets saw a $1.81 billion infusion in June 2022 across 149 fundraising rounds. However, the industry saw a significant fall this year, with only 83 projects receiving a total of $520 million in funding.

The amount of financing received this month is the lowest so far, which shows that investment activity in the market for digital assets has sharply decreased.

Source: RootData

The market for digital assets made a great advancement in June 2022, marking a noteworthy milestone as it received an astounding infusion of $1.81 billion over the course of 149 funding rounds. This increase in funding demonstrated the rising confidence and interest in the digital asset market.

The increasing trajectory continued, nevertheless. In September 2022, just a few months later, the industry for digital assets broke all prior fundraising records. This month saw the biggest amount of investment rounds ever, with 138 funding rounds totaling a whopping $1.85 billion.

The unprecedented feat of receiving record-breaking funding in September 2022 underlined the continuous interest from venture capitalists (VCs) as well as the importance and attraction of digital assets as a means of investing.

Yet despite a few months with higher investment activity, RootData’s figures show that overall VC interest in the digital asset area is clearly declining.

According to RootData’s findings, the infrastructure sector has taken the lead in terms of funding in the digital asset market. This category obtained a remarkable $213 million over 26 projects in the most recent month.

It is crucial to remember that this number represents a huge decrease of almost 50% from the previous month. Some 28 infrastructure-related initiatives during that time period attracted a sizeable $410 million.

Bitcoin makes it past the $31K territory. Chart: TradingView.com

Despite the decline in investment, the infrastructure sector remains a top priority for investors and business owners, demonstrating its crucial role in advancing and supporting the ecosystem for digital assets.

When it comes to investment, the infrastructure sector took the lead in June, collecting $213 million to help 26 projects get off the ground. In contrast to the previous month, when 28 crypto ventures earned over $410 million from venture capitalists, this constituted a huge fall of roughly half.

Trailing behind, the centralized finance (CeFi) industry took second place with funding totaling $101 million, or approximately 20% of all financing. Notable businesses like OPNX and Chiliz helped make the CeFi market successful.

The gaming industry received almost $62 million, placing it in third place in terms of funding. Notably, blockchain gaming platform Mythical Games, which raised $37 million in its most recent investment round, stood up as the biggest contributor.

Influential investors like Animoca Brands, ARK Invest, and MoonPay have contributed to the company’s current $1 billion valuation. With positions four and five, respectively, decentralized finance (DeFi) and non-fungible tokens (NFTs) completed the list.

Source: PitchBook/Bloomberg

Meanwhile, research firm PitchBook also found that global VC funding for the business dropped to $2.4 billion in the quarter, down 80% from the record high of $12.3 billion in the same period previous year.

PitchBook crypto analyst Robert Le said:

“There’s still a lot of fear about what’s going to happen since the macro environment is still very uncertain.”

Featured image from Seeking Alpha

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