Investment by venture capital companies in cryptoprojects has fallen to its lowest level in almost two years

The collapse of FTX put the brakes on venture-backed activity, but analysts expect funding for blockchain startups to grow this summer. Crypto-Upvotes expert review

Venture capital investment in the cryptocurrency industry fell to its lowest level in nearly two years in the fourth quarter of 2022. According to PitchBook analysts, $2.3 billion was invested in crypto startups in the last three months of last year. And that’s 75% less than the same period last year.

The last time less money was invested in the crypto industry was in Q4 2020. At that time, it was $1.4 billion. Since then, investments in the crypto industry have been growing, from Q1 2021 ($3.5 billion) to Q1 2022 ($12.1 billion). Between April and June of last year, $7.4 billion was invested in the industry. Аnd between July and September, $4.9 billion.

In all, a record $26.7 billion was invested in blockchain startups last year. Аnd most of that came in the first half of the year. Ventures then began to slow their investment activity. But the collapse of FTX in November prompted them to slow down even more, according to PitchBook crypto analyst Robert Le. According to him, investors are trying to figure out what will happen next and are in no hurry to place capital.

FTX Group’s departure from market, which lacked strict controls and due diligence when investing, also changed the situation for investing in the crypto business. According to Le, FTX had a reputation for making deals and writing big checks. While asking founders only a few questions during the quick approval process. And it often crowded out other venture capitalists.

Immediate prospects

Not having FTX will make for a better market for other crypto investors. Because now they can get back to properly evaluating projects and the necessary prudence. The analyst still expects venture capital investment in the crypto sector to grow in the summer of 2023. That’s partly because many crypto funds are required to use the capital they raised during the digital asset boom.