Cointelegraph Research analyzed all venture capital transactions and trends in the blockchain industry during the fourth quarter of 2022. The second half of 2022 saw a dramatic decline in capital inflows across the top five sectors of the blockchain industry. the chain of blocks: decentralized finance (DeFi)centralized finance (CeFi), non-fungible tokens (NFTs), infrastructure and Web3. The first half of 2022 brought in investment of just under $30 billion, while the second half only saw $7.3 billion, a dramatic drop.
As the crypto industry moves towards 2023, Cointelegraph Research has analyzed data from its Venture Capital Database, containing comprehensive details on deals, mergers and acquisition activities, investors, crypto companies, funds, and more. Using this database, Cointelegraph Research breaks down the numbers to find the biggest industry trends. Their latest report explores the fourth quarter of 2022 and how it relates to the bigger picture of 2018 to 2022.
Download the full report here, complete with charts and infographics.
Investments decreased from April 2022
After the fallout from the Terra collapse in the early part of 2022, the blockchain industry did not seem to attract venture capital to invest in this industry as it did in 2021 and early 2022. $30.5 billion was invested in 2021, and 2022 was on track to double that, until April 2022, when it all started to decline. September saw a brief uptick in capital investment, but it didn't hold up as the year ended, and the last three months were hovering below $1 billion in investment.
The number of transactions was also down considerably, to just 182 in the fourth quarter. While there have been big deals in prior months that have always passed the $100 million mark, there were only five in the fourth quarter above $100 million. The focus of those 182 deals remained within the Web3 sector, which comprises subcategories such as metaverse, GameFi, id, and many others, followed by infrastructure and DeFi. NFTs and CeFi were the least popular in terms of number of transactions, but just looking at those numbers can be misleading.
The most and least active sectors tie for investment
Web3 was the most popular investment sector in the blockchain industry, with 616 individual deals, while CeFi was the least popular, with 201 deals. However, both sectors generated a total of $9.2 billion in 2022. The average deal for Web3 was $15.4 billion, compared to CeFi's average of $46.6 million. Blockchain and cryptocurrency projects seeking venture capital or investment funding in the future may want to pay attention to the sector they are in so they can better prepare.
This report is drawn from Extensive Cointelegraph Research Terminals Database along with analysis by Michael Tabone, a senior economist at Cointelegraph Research. Tabone has extensive experience in economics, business, finance, cryptocurrency, blockchain technology, and emerging technologies. In addition to working for Cointelegraph Research, he has a Ph.D. candidate completing his dissertation, which focuses on DAO theory and application.
Keychain Ventures is a crypto investment firm that invests in different funds in the blockchain space. Keychain Ventures, along with Cointelegraph Research, will feature quarterly interviews with venture capital firms, as well as cryptocurrency and blockchain projects that have recently gone through a funding round. These interviews will reveal various views on the investment practices of all parties involved.
The opinions expressed in this article are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific investment product or security.
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