3-7-2023 (LONDON) Venture capital investments in cryptocurrency companies have experienced a significant decline of over 70% in the past 365 days, as reported by RootData, a crypto data provider. The latest figures reveal that during June 2022, the digital asset space attracted $1.81 billion across 149 funding rounds. However, this year, only 83 projects managed to secure $520 million, marking the lowest-funded month to date.
RootData’s data clearly illustrates a downward trend in venture capitalists’ interest in the digital asset space, despite occasional months that saw increases. September 2022, for instance, recorded the highest funding amount, reaching $1.85 billion, distributed among an impressive 138 rounds. Additionally, June of the previous year witnessed the highest number of recipients, with 149 funding rounds taking place. Nevertheless, according to the data platform, the infrastructure category remains the leader, securing $213 million in funding last month for 26 projects. However, this still represents an almost 50% drop compared to the previous month, which saw 28 projects receive $410 million.
Among the winners in the infrastructure category, UK-based startup Gensyn AI stood out, securing a staggering $43 million in a Series A round led by a16z crypto. The second most-funded category is CeFi (centralized finance), featuring companies like OPNX and Chiliz, which received $101 million, accounting for nearly 20% of all financing. Games secured the third spot with $62 million, with a significant portion going to Mythical Games, which raised $37 million in its Series C1 funding round. DeFi (decentralized finance) and NFTs (non-fungible tokens) round off the list of categories, in that order.
Over the past year, Ethereum emerged as the most funded cryptocurrency project, with 1,826 projects receiving funding. Polygon (MATIC) follows at a distant second with 1,076 funding rounds. Geographically, the United States received the largest share of funding, accounting for 34% of the total, although this distribution appears likely to change.
According to the data platform, Coinbase Ventures is identified as the most active venture capital firm, having participated in 71 funding rounds over the past year. It is closely followed by Hashkey Capital and Shima Capital, which funded 54 and 49 projects, respectively.
The once high-flying crypto asset class has taken a back seat to other investment opportunities, particularly in the field of artificial intelligence (AI). In a previous interview with Decrypt, Mysten Labs co-founder and CEO Evan Cheng explained that this shift is due to the broader appeal of AI products and applications, while the crypto industry continues to focus inward. Nonetheless, Cheng views AI as complementary to Web3, as demonstrated by Justin Sun’s recent launch of a $100 million AI development fund.
The decline in interest from venture capitalists in the crypto asset space could be attributed to various factors. Actions by companies such as FTX and Terra, along with the banking turmoil that affected all four “crypto-friendly banks,” may have contributed to the diminished enthusiasm. Additionally, the recent regulatory clampdown in the United States, a country that has been a leader in crypto investments, has added to the mix of challenges faced by the industry.
