According to data published by RootData, a crypto data provider, venture capital investments in cryptocurrency firms have dropped by more than 70% over the past year. In June of 2022, the digital asset market garnered $1.81 billion across 149 funding rounds. In June of current year, however, only 83 companies reported receiving funding of $520 million.
Despite a few up months in the middle, the RootData data show a definite downward trend for venture capitalist interest in the digital asset industry overall. For example, September 2022 set a new record with $1.85 billion in fundraising across 138 investment rounds. In June of last year, 149 people were lucky enough to receive a round.
Methods of Cryptocurrency Fundraising:
The data portal shows that last month, 26 infrastructure projects received a total of $213 million in funding, making this sector the most popular one. Even still, this is a decrease of nearly half compared to the $410 million allocated to 28 projects in the previous month.
The winner of this category was the UK-based business Gensyn AI, which raised $43 million in a Series A investment headed by a16z crypto.
Centralized finance, or CeFi, is the second most funded space, bringing in $101 million and accounting for roughly 20% of total funding. Companies in this space include OPNX and Chiliz. Third place went to the gaming industry, which brought in $62 million, $37 million of which went to Mythical Games during its Series C1 funding round. The remaining two classes on the list are DeFi and NFTs.
In comparison to Polygon’s (MATIC) 1,076 investment rounds, Ethereum’s 1,826 projects received funding last year. The United States received the largest share of financing (34%) of all the countries on their list, although this may soon change.
According to the data presented, Coinbase Ventures was the most active venture capital firm in 2018, having taken part in 71 rounds, followed by Hashkey Capital with 54 and Shima Capital with 49 companies funded.
The once-soaring crypto asset class has fallen to the wayside in favor of investments in other areas, most notably artificial intelligence.
In an earlier interview with Decrypt, Evan Cheng, co-founder and CEO of Mysten Labs, explained that this transition is occurring because AI products and applications can serve to a wider audience than the crypto business. However, Cheng thinks AI is complimentary to Web3; for instance, Justin Sun just created a $100 million AI development fund.
VCs’ waning enthusiasm for the cryptocurrency market could be attributable to a number of factors. Some of the reasons for this decline include the unfavorable activities of corporations like FTX and Terra, as well as the banking upheaval that led to the failure of all four “crypto friendly banks.” Furthermore, the United States, which has led the way for crypto investments despite recent regulatory tightening, further complicates matters.
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