Crypto VC Funding Drops 70% in 2023
The crypto venture capital (VC) funding in 2023 saw a significant decline, dropping by 70% and securing only about $10 billion in deal value. This is a stark contrast to the previous year, where funding reached nearly $32 billion with almost 90% more deals. A report published by Galaxy Digital reveals lackluster activity in the fourth quarter of 2023, with only 359 deals totaling nearly $2 billion. The report also highlights that most VC deals were with early-stage companies, with less than 20% involving later-stage firms in the third and fourth quarters of the year.
Late-Stage Deals Increase in Q4
In the fourth quarter of 2023, late-stage venture deals accounted for just over 14% of total deal counts. This marked the highest percentage of late-stage deals seen in quarterly data categorized by stage. Conversely, deals in the pre-seed stage reached their lowest level since the first quarter of 2016, making up only about 9% of total deals. The report emphasizes that VCs leveraged later-stage deal valuations and supported “prized” portfolio companies.
Top Deals of 2023
Looking at the top deals of 2023, only eight surpassed the $100 million mark in deal value. Some notable deals included Wormhole with $225 million, Line Next with $140 million, Blockstream with $125 million, LayerZero with $120 million, and Worldcoin securing $115 million. These deals were predominantly later-stage investments.
Crypto VC Fundraising Cools as Market Valuations Normalize
In 2023, global VC funding in crypto and blockchain raised $5.75 billion, a significant decrease from the previous year’s record of $37.7 billion. The report emphasizes the role of venture funds in supporting the blockchain/crypto ecosystem by serving as the primary source of capital for new companies. While the report doesn’t predict the fundraising landscape for 2024, it highlights that Bitcoin’s unique value proposition is strengthened by geopolitical uncertainty and banking system turmoil.
Hot Take: Crypto VC Deals in 2023 Plunged 70% on Funding Constraints
Crypto venture capital funding experienced a sharp decline in 2023 due to funding constraints, dropping by 70% compared to the previous year. This drop reflects the challenges faced by VC funds in deploying capital and the increasing dominance of early-stage companies in the crypto sector. Late-stage deals saw a slight increase in the fourth quarter, while pre-seed stage deals reached their lowest level in years. Despite the decline, venture funds continue to play a crucial role in supporting new companies and driving innovation in the blockchain/crypto industry. The future of crypto fundraising remains uncertain, but Bitcoin’s unique value proposition remains strong amidst global uncertainties.
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