Seed funding in the crypto industry has fallen back to Q4 2020 levels amid the ongoing bear market.
According to an October 5 report from blockchain analytics firm Messari, a total of $2.1 billion was spent. increase by crypto startups in 297 deals in Q3 2023, down 36% from the previous quarter and almost 70% from Q3 2022.
Seed funding represented the largest fundraising category, with $488 million raised across 98 deals. "Trends in deal counts show a significant shift from later-stage projects to early-stage projects over the past three years," the researchers wrote. Less than 1.4% of deals involved companies in the Series B round or later.
Meanwhile, strategic financing rounds rose sharply from 0.2% of total deal participation in Q4 2021 to over 22% as of Q3 2023. The highest private equity round during the quarter was a $200 million investment in UAE-based Muslim Coin by ABO Digital from family office Alpha Blue Ocean. . Mesari stated:
"Tough market conditions are forcing projects to raise short-term bridge rounds or, ultimately, be acquired by larger projects."
Despite regulatory uncertainty, 54% of all active venture capital investors were from the United States, more than the rest of the world combined. Investor appetite has also shifted from user-facing applications to blockchain infrastructure, with the latter consistently outperforming the former in funding over the past three months.
"However, this trend may not last long, as more investors begin to realize that without successful user-facing crypto applications, infrastructure investments are less likely to generate the desired returns," the researchers wrote.
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