VCs: Galaxy Digital Research in its latest report mentioned that VCs had invested over $5.5 billion in crypto businesses in Q3 2022. But, it was a new low for the year.
Pitchbook reported a massive 37% drop in third quarter crypto funding compared to the same period in 2021. However, despite the low quarterly numbers through 518 deals, that figure is higher than the 2020 peak and 7-year average of $3.1 billion. over $2 billion.
Low crypto market cap with low VC funding
Galaxy commented that May and June have seen a drop due to volatile market conditions, with funds probably delaying their fall fundraising until Q4 to give the markets time to adjust.
According to CoinGecko’s quarterly report, in Q3, crypto prices also remained lower after the overall market cap was lower in July. It noted, “In Q3, it rose to ~$1.2T in August, before falling again to +6.5% or nearly ~$100B more than at the end of Q2 to end the quarter.”
“Deal activity tracks very closely to the crypto market cap,” Robert Ley, fintech analyst at PitchBook, told TechCrunch. “It’s a small lag, but if you overlay the crypto market cap into the amount of venture capital going into the space in a quarter or month, it tracks closely.”
For example, the valuation of Blockchain.com has also affected the weak market environment. Despite the exchange being valued at $14 billion earlier this year, a source-based news article this week reported that the current round could be valued at around $3 to $4 billion.
Deal count of some sectors high
Galaxy also said, “Despite the decline in broader VC investment, early-stage investing remains competitive and strong. Late-stage investing, on the other hand, showed significant weakness, potentially due to continued bloated valuations.”
Interestingly, the research found that in the third quarter of 2022, $1.5 billion was invested in companies created in 2018 and 2021, respectively. The companies that launched in 2021 outperformed their contemporaries in fundraising and deal count, collecting $1.5 billion through 190 deals. This is in contrast to Q2 2022, when only businesses established in 2018 were the market leaders, according to the report.
Although “Web3, NFT, DAO, Metaverse and Gaming” outperformed all other sub-sectors in terms of deal count, the report led the “Trading, Exchange, Investment and Lending” category in terms of total invested capital. to be done.
Meanwhile, the latest CoinShares Weekly Fund Flow report noted crypto outflows of around $5 million, accompanied by “investor apathy” last week.
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