Crypto projects attracted the minimum investment in two years

Investments of venture capital companies in the cryptocurrency industry fell to the lowest level in almost two years in the fourth quarter of 2022, RBC Crypto reports, citing a PitchBook study. According to analysts, over the last three months of last year, $2.3 billion was invested in crypto startups, which is 75% less than in the same period of the previous year.

The last time a smaller amount of funds was invested in the crypto industry in the fourth quarter of 2020, then it will amount to $1.4 billion. Since then, investments in the crypto industry have grown, starting from the first quarter of 2021 ($3.5 billion) until the first quarter of 2022 ( $12.1 billion). In April-June last year, $7.4 billion was invested in the industry, from July to September – $4.9 billion.

In total, a record $26.7 billion was invested in blockchain startups last year, most of which came in the first half of the year. VCs then began slowing down their investment activity, but the FTX crash in November prompted them to slow down even further, according to PitchBook crypto analyst Robert Le. According to him, investors are trying to understand what will happen next, and are in no hurry to place capital.

The exit from the market of the FTX group of companies, which did not have strict control and due diligence when investing, also changed the situation with investments in the crypto business. Le said FTX had a reputation for closing deals and writing big checks with just a few questions from founders during a quick approval process, and that often drove out other VCs.

The absence of FTX will make the market better for other crypto investors, because they can now return to the correct assessment of projects and the necessary due diligence, Le said. The analyst still expects venture capital investment in the crypto sector to pick up in the summer of 2023. Partly because many crypto funds are required to use the capital they raised during the digital asset boom.

At the end of December, it became known that the FTX exchange carried out two venture deals in 2022 for $ 200 million from client funds. Through FTX Ventures, the former head of the exchange, Sam Bankman-Fried, sent $100 million to fintech startup Dave in March, and $100 million to Web3 developers Mysten Labs in September.


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