Venture-capital investments in the crypto industry fell by 68% in 2023

In 2023, venture capitalists invested $10.7 billion in blockchain startups. This is 68% less than the prior year ($33.3 billion), according to The Block.

The bulk of the funds were invested in the first half of the year, after which there was a marked drop in funding volumes. In November, against the backdrop of a market recovery, signs of renewed business activity emerged.

The share of deals closed at early stages (pre-seed and seed rounds, Series A) increased compared with the previous year, when more funds went into relatively mature projects. 

Among investors, the most popular sectors were: NFT, gaming, infrastructure, Web3.

Not everything is bad

Despite the 68% drop, 2023 turned out to be the third-largest year by investment volume among the previous periods, as shown in the diagram below:

«The significant reduction in funding for crypto projects in 2023 was largely expected, given the macroeconomic environment, regulatory uncertainty and the scars left by recent major failures in the industry», — noted Abhishek Saxena, head of Polygon Ventures.

However, venture winter served as a healthy and necessary correction, allowing the industry to take stock and refocus on “critically important priorities,” the expert added.

In 2023 there were 32% fewer deals than the year before (1819 vs 2671). On the other hand, the year’s figures exceed those of 2020 and 2021:

«Sectoral distribution turned out to be more diverse than in previous periods», noted The Block Research.

Researchers expect a revival of activity in the coming year (in both volume and number of deals). They justify their forecast by “recent price changes and expected bullish trends” in the market.

In November, venture investments in crypto companies grew by 179%.

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