In the first quarter of 2023, venture funding for crypto and blockchain startups has slowed to a crawl, with these businesses raising a mere $900 million, according to a report by The Information on Wednesday.
The figure represents an 87% drop from the same period in 2022, marking the lowest level of funding since the fourth quarter of 2020 when crypto fundraising amounted to $800 million. Additionally, the number of deals has plunged by roughly two-thirds, falling to 136.
The decline in venture funding for crypto and blockchain startups raises concerns over the growth prospects of the sector. It is linked to regulatory uncertainties, broader market volatility as well as recent high-profile implosions such as FTX and Celsius.Venture capitalists are now getting more serious about due diligence after such massive failures in the crypto industry, according to Bloomberg.
The coming months will reveal whether the sector can regain momentum and attract more investors, or if the slump in funding becomes a more prolonged trend.
Despite the overall slowdown in funding for the crypto sector, Ledger, a prominent crypto wallet company, managed to secure an additional $108 million in March. This highlights that while the industry may be experiencing a funding drought, established companies with proven track records can still attract significant investments.