Per a CryptoMonday analysis, crypto startups raised $4.2B from venture capitalists (VCs) in Q2 2022. That figure represented a 31% decline from the $6.1B it had attracted in Q4, 2021: a sizeable decrease indeed. This is not surprising given the number of troubles in the industry as of late: the collapse of the TerraUSD stablecoin, the issues for crypto lenders like Celsius and Babel Finance and layoffs at Coinbase and Crypto.com have all contributed to the uncertainty.
“The overall venture capital market has been cooling off since the pandemic’s onset, and this has impacted the flow of money into crypto startups,” explained CryptoMonday CEO Jonathan Merry. He continued, “Additionally, the collapse of the crypto winter that the sector is currently experiencing has forced many investors to retreat from the sector altogether.”
Merry insists that this downward trajectory indicates the difficulties the crypto sector has been experiencing since mid-2021. Since then, the market for digital currencies has experienced a prolonged bearish trend, with most major coins experiencing significant price declines. As VCs are risk averse, they have been hesitant to invest in crypto startups.
Q2 Saw a Big Dip In Large Funding Rounds
Though Crypto funding dipped in Q2 this year, the figures are an improvement on the slightly under $4.2B realized in Q2 2021. VC investment stalled in Q2 2022, with fewer large deals than the previous quarter. However, this was offset by a continued flow of smaller deals.
According to CryptoMomday, crypto startups raised much money in Q1 2022, with six funding rounds of $400 million or more. However, in the second quarter, there was only one round involving Circle Internet Financial. The Boston firm closed a $400M private equity round from a consortium that included BlackRock.
Interest in Digital Asset Space is Still High
These funding rounds reflect a continued interest in the digital asset space from traditional financial institutions and investors. With more mainstream companies entering the space, we can expect even more growth in the digital asset market in the coming months and years.
Given the recent struggles of the crypto market, it’s impressive that funding rounds for blockchain startups are still happening. The crypto market has lost most of its value from the dizzying heights it attained in mid to late 2021. But despite this plunge, crypto startups can still secure funding, which shows that there is still confidence in this industry. A crypto winter may be upon us, but not all hope for funding is lost. A new digital asset spring may yet come quicker than expected.
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