In 2023, venture capital firms invested a total of $10.7 billion in cryptocurrency and blockchain startups, marking a drastic 68% decrease from the previous year’s investment of $33.3 billion. Despite the decline, 2023 still ranked as the third-highest year for venture capital investment in the cryptocurrency industry and showcased a trend towards more diversified investment areas.
According to data from The Block, the investment amount in 2023 surpassed that of previous bear markets, including a combined investment of $6.4 billion in 2019 and 2020. Most of the investments in 2023 occurred in the first half of the year, although there was a slight increase in investment in November, the overall investment amount in the second half of the year declined.
Abhishek Saxena, the CEO of Polygon Ventures, stated that the sharp decrease in investment in 2023 was not surprising, considering factors such as the macroeconomic environment, regulatory uncertainty, and the collapse of industry companies. However, many investors and company founders were still taken aback by the force of the capital withdrawal. Nevertheless, this adjustment is considered healthy and necessary to allow the industry to self-assess and refocus on important priorities.
In terms of transaction volume, the number of cryptocurrency venture capital deals decreased in 2023, with a total of 1,819 transactions completed, a 32% decrease compared to the 2,671 transactions in 2022. Overall, the transaction volume in 2023 remained higher than the monthly transaction volume in 2020 and was comparable to that of 2021.
Regarding investment stages, most of the funds in 2023 flowed into seed-stage and pre-Series A startups, while investment activities in mid-to-late-stage startups were relatively low, consistent with the trend in 2022.
In terms of investment areas, NFTs and the gaming sector maintained strong investment interest in 2023, while infrastructure and Web3 also received significant attention. Compared to previous years, venture capital investment in the cryptocurrency industry appeared to be more diversified.
Looking ahead, cryptocurrency venture capital expects a significant increase in funding and transactions in 2024, aligning with recent market trends and the bullish sentiment towards the future market.
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