TL;DR Breakdown
- The crypto industry witnessed a sharp decline in Venture Capital (VC) funding, hitting a two-year low, as June 2023 saw a mere 83 public investments.
- In June, the funding amounted to $520 million, marking a 32% decrease compared to the prior month and a staggering 71% plunge from the previous year.
- In spite of the overall decline, Gensyn stood out as one of the few companies to secure a significant investment, raising $43 million in a Series A funding round.
The world of Venture Capital (VC) funding is currently experiencing a noticeable slowdown, as recent data highlights. According to RootData, public investment from crypto VCs has reached a concerning two-year low, with a mere 83 deals recorded in June.
This significant shift stands in stark contrast to the 97 deals in May 2023 and the 149 deals in June 2022, representing a decline of 14% from the previous month and a substantial 44% plunge compared to the same period last year.
Riding the storm: Project classification and funding breakdown
Venture Capital funding in the crypto space demonstrates remarkable diversification across multiple categories, including CeFi, DeFi, Infrastructure, NFT/GameFi, and Web3, among others.
A detailed analysis of the numbers reveals that infrastructure projects receive the largest share of funding, comprising an impressive 31% of the total projects.
In contrast, DeFi and NFT/GameFi account for approximately 18% and 20% of the funding respectively, showcasing their significant presence in the market. CeFi, although trailing behind, still commands an 8% share of the funding.
Nevertheless, it is the overall magnitude of the funding that captures attention. The capital influx for June reached a substantial $520 million. While this represents a 32% decline from May’s total of $760 million, it is important to note that June 2022 saw an extraordinary $1.81 billion, indicating a 71% decline year-on-year.
Despite the overall slump in Venture Capital funding, the month of June witnessed several noteworthy investments. Gensyn, a pioneering blockchain-based AI computing protocol, secured an astounding $43 million in a Series A round, led by a16z with the participation of other prominent investors. This injection of capital aims to bolster Gensyn’s AI development capabilities, further solidifying their position as a frontrunner in the industry.
Following closely, Mythical Games, a Web3 game studio renowned for its blockchain-based games and marketplace, raised $37 million in a Series C1 round. Similarly, Galaxy Finance, a Web3 wallet platform, and Arkon Energy, a Bitcoin mining startup focusing on renewable power, obtained funding of $30 million and $26 million respectively.
Additionally, the world’s first cryptocurrency-denominated life insurance firm successfully concluded a fundraising round, securing approximately $19 million. This investment will be utilized to obtain regulatory clearance and launch their innovative bitcoin-denominated whole life insurance policy.
These remarkable investments in June demonstrate the continued confidence and interest of Venture Capital firms in the crypto space, despite the temporary dip in overall funding levels.
Is this the new normal?
With the numbers painting a picture of decline, one must consider whether this is a temporary setback or the new normal for Venture Capital funding in the crypto space. However, it’s important to recognize that even amidst this downturn, innovative companies are successfully securing substantial funds, highlighting the enduring appeal of the crypto sector.
While the recent dip in Venture Capital funding may raise concerns, it is essential to approach these figures with a nuanced perspective. This temporary lull could serve as a launching pad for an eventual upswing, driven by the ongoing innovation and resilience that define the crypto industry.
Only time will reveal whether this is a minor hurdle or an indication of more significant turbulence on the horizon for Venture Capital funding.