Crypto-focused venture capital investors are getting on with their work. Many remain confident in their investment strategies despite a weak first-quarter market for crypto startup fundraising. Others are noticing a steeper decline in the pace of investment.
โI definitely saw a big slide and drop in activity [in] Western marketsโ, in the first quarter of 2023, said David Gan, founder and general partner of OP Crypto. โI don't think people are fanning out much, and the rounds are taking much longer to close than ever before.โ
In the first quarter, $2.53 billion in capital was raised across 347 cryptocurrency and blockchain companies, down 79% from $12.27 billion in the prior-year quarter and a decline of about 18% from Q1. the $3.08 billion raised by the same corporate cohort in the previous quarter, according to preliminary data from PitchBook.
The stark contrast to the prior-year quarter is not surprising. The crypto world was in a different place back then. FTX, for example, was still a major crypto exchange and spawned a $400 million roundbringing its total raised capital to $2 billion and giving the company a valuation of $32 billion at the time.
The weather has changed since then: shredded FTX and Terra/Luna collapsed (and brought $40 billion with it). Meanwhile, a series of Chapter 11 bankruptcy filings occurred at crypto mega-institutions, including FTX, FiBlock, Capital of the three arrows, Celsius Network, digital traveler and Genesis Global Trade.
The last quarter was a "thaw of people wanting to open their checkbooks," said Michael Terpin, chief executive of Transform Ventures. "Right after FTX, it's predictable that nobody would want to invest in anything."
