Crypto Venture Capital Funding: The 2023 Reality Unveiled

Venture capital funds have appeared increasingly reticent when it comes to crypto projects, as per recent insights from Galaxy Research. Only $1.98 billion has been invested across 376 deals, a level not witnessed since Q4 2020, extending an 18-month trend. This decline is in stark contrast to the same period last year, which saw over $6 billion deployed across 600 deals. Even in the last quarter, funding allocated to crypto and blockchain firms plummeted to $2.3 billion.

However, Kavita Gupta, founder of Delta Blockchain Fund, offers a different perspective. She suggests that crypto projects might not be announcing their rounds, contributing to the perception that VC firms have lost interest. Gupta reveals that her fund recently closed three deals and is actively pursuing more, emphasizing that many other firms are deploying capital.

Notable figures in the crypto space also express unwavering belief. For instance, Bitcoin advocate Tim Draper launched Draper Goren Blockchain, highlighting the influx of entrepreneurs into the industry. MEXC Ventures, the investment branch of MEXC exchange, has also signaled significant interest by investing in Toncoin.

The market’s overall downturn is another factor affecting VC investments, according to Gupta. While the previous bull cycle experienced a digital gold rush with 1,300 deals worth $11.8 billion during Q2 last year, rounds today aren’t as oversubscribed, allowing for more in-depth due diligence.

Gupta predicts that two key developments will shape the future. First, regulatory clarity is needed to unlock further capital, and second, mainstream adoption will be pivotal. She cites JPMorgan’s move to cease crypto activities in Chase U.K. institutions, which may influence other companies.

For entrepreneurs seeking funding, the landscape has evolved. Raising money now involves more steps, with a stronger focus on companies demonstrating real-world product usage, reinforcing credibility in the eyes of investors.