Although fundraising in the crypto and blockchain space may slow, momentum eventually picks up. The year 2023 is off to a good start, with solid numbers in January and February. Returning to $1 billion monthly in funding rounds is a matter of time.
Crypto Funding Rounds Pick Up Again
It isn’t hard to see why 2-22 wasn’t necessarily the best year for crypto and blockchain funding rounds. Virtually all projects lost value due to overarching bearish market conditions. When assets lose value, industry interest cools off, too. Investors and VCs expect returns on their investment, which is always tricky in such a volatile industry.
As a result, funding rounds slowed in the second half of 2022. The industry saw over $30.5 billion in May 2022, which dropped to under $1 billion by July. Although September offered some hope, the meek trend continued. Unfortunately, numbers dwindled further in October, November, and December, by which the total dropped to $723 million.
Those numbers are still substantial for a struggling industry. However, expectations are very high, and real-world products and services need to come forward. Whether that will happen in 2023 is unclear, but investor sentiment has improved. Both January and February would show good numbers, even if January was well below $600 million.
The momentum has picked up this month, culminating in over $800m in funding rounds. There are still a few days left in the month for future growth. Overall, investors and VCs show a growing risk appetite, although they mainly focus on Series A-B-C funding. There are a few private rounds but fewer pre-seed investments. It will be interesting to see how that situation evolves in the coming months.
Notable Rounds In February
It is worth noting there are many smaller funding rounds in 2023. Amounts of $5 million or less have become the norm, rather than an exception. However, Chain Reaction raised $70m in Series C funding for its privacy-accelerating hardware. Towns (a decentralized game) raised $25.5 million and Beldex (private, composable dApps) secured $25 million. Web3 gaming outfit Kratos Studios collected another $20 million in seed funding.
Taurus is another initiative with a $65 million funding round in February 2023. Builders of digital asset infrastructure have a golden opportunity following the collapse of other providers. However, they must learn valuable lessons on what not to do. Proper funds segregation is a must, and risk appetite should be minimal. That also applies to SALT, which pocketed $64.4 million for crypto-backed loans.