VCs Not Interested in Blockchain as Funding Slows
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The second
half of 2022 brought a visible slump in venture capital investments across all significant
blockchain industry sectors, according to the newest report published by
Cointelegraph Research.
Although the value of funding raised for the entire year was greater than $5 billion, which was higher than in 2021, there was a significant slowdown between June and December. Specifically, in the last three months of the year, funding came in at only
$2.3 billion and dropped to $660 million in December.
The report
categorizes the blockchain industry into five main sectors: centralized finance
(CeFi), decentralized finance (DeFi), infrastructure, Web3 and nonfungible
tokens (NFTs). In the first half of the year, funding tallied at $30 billion, which is almost as much as the entire year of 2021.
When it
looked like the record-breaking figure would be doubled, the crypto winter and
the collapse of more crypto-oriented businesses made VCs less keen to invest
their funds. As a result, the total amount raised in H2 2022 was $7.23
billion, slipping progressively more each month, as shown in the chart below.
Web3 Was the Most Active
Part of the Blockchain Industry
The number
of transactions in the fourth quarter fell to 182, and only five exceeded $100
million. Within this group, investments in the Web3 sector, which includes
Metaverse and GameFi, proved to be the most popular. In contrast, the least common
were investments in NFTs and CeFi.
Throughout
2022, the Web3 sector accounted for 616 deals, while CeFi accounted for only 201.
Interestingly, the value of funding was the same at $9.2 billion for both. Also, the
average transaction for Web3 was valued at $15.4 million, while in CeFi, it was estimated at
$45.6 million.
DeFi
attracted $3.1 billion in 299 deals and NFTs $3 billion in 243 sales. The
infrastructure sector proved to be the most profitable; of the 295 financing
deals completed, companies managed to raise almost $12 billion in capital, which is an average of $40.1 million per deal.
The data was confirmed in a separate report by Crunchbase. It showed that funding for Web3
startups fell by almost $7 billion in Q4 2022, from $9.3 billion to $2.4 billion.
Despite the drastic descent in the latter part of the year, the entire year of 2022 turned
out to be quite positive for Web3 companies.
Watch the recent FMLS22 panel discuss back-office technology in the fintech business.
Fintech Funding Falls
Along with Blockchain Investments
It is not
only blockchain startups and young companies that have suffered in 2022, but
also the broader financial technology (fintech) sector. According to Innovative
Finance, global support for the fintech sector has shrunk to $95 billion, or by
30%. The number of completed transactions fell by almost 1,000 to 5,263.
The UK fintech industry was more resilient to adverse conditions. In the UK, the value
of funding lessened by only 5% to $10.2 billion.
“London’s
fintech industry has consistently proven itself to be both robust and ambitious
in the face of economic challenges. As businesses brace for a turbulent 2023,
fintech firms can play a vital role. Our industry can and will bounce back
quickly, driving growth, job creation and enabling businesses to reach their
full potential,” Khalid Talukder, the Co-Founder of DKK Partners, said.
The second
half of 2022 brought a visible slump in venture capital investments across all significant
blockchain industry sectors, according to the newest report published by
Cointelegraph Research.
Although the value of funding raised for the entire year was greater than $5 billion, which was higher than in 2021, there was a significant slowdown between June and December. Specifically, in the last three months of the year, funding came in at only
$2.3 billion and dropped to $660 million in December.
The report
categorizes the blockchain industry into five main sectors: centralized finance
(CeFi), decentralized finance (DeFi), infrastructure, Web3 and nonfungible
tokens (NFTs). In the first half of the year, funding tallied at $30 billion, which is almost as much as the entire year of 2021.
When it
looked like the record-breaking figure would be doubled, the crypto winter and
the collapse of more crypto-oriented businesses made VCs less keen to invest
their funds. As a result, the total amount raised in H2 2022 was $7.23
billion, slipping progressively more each month, as shown in the chart below.
Web3 Was the Most Active
Part of the Blockchain Industry
The number
of transactions in the fourth quarter fell to 182, and only five exceeded $100
million. Within this group, investments in the Web3 sector, which includes
Metaverse and GameFi, proved to be the most popular. In contrast, the least common
were investments in NFTs and CeFi.
Throughout
2022, the Web3 sector accounted for 616 deals, while CeFi accounted for only 201.
Interestingly, the value of funding was the same at $9.2 billion for both. Also, the
average transaction for Web3 was valued at $15.4 million, while in CeFi, it was estimated at
$45.6 million.
DeFi
attracted $3.1 billion in 299 deals and NFTs $3 billion in 243 sales. The
infrastructure sector proved to be the most profitable; of the 295 financing
deals completed, companies managed to raise almost $12 billion in capital, which is an average of $40.1 million per deal.
The data was confirmed in a separate report by Crunchbase. It showed that funding for Web3
startups fell by almost $7 billion in Q4 2022, from $9.3 billion to $2.4 billion.
Despite the drastic descent in the latter part of the year, the entire year of 2022 turned
out to be quite positive for Web3 companies.
Watch the recent FMLS22 panel discuss back-office technology in the fintech business.
Fintech Funding Falls
Along with Blockchain Investments
It is not
only blockchain startups and young companies that have suffered in 2022, but
also the broader financial technology (fintech) sector. According to Innovative
Finance, global support for the fintech sector has shrunk to $95 billion, or by
30%. The number of completed transactions fell by almost 1,000 to 5,263.
The UK fintech industry was more resilient to adverse conditions. In the UK, the value
of funding lessened by only 5% to $10.2 billion.
“London’s
fintech industry has consistently proven itself to be both robust and ambitious
in the face of economic challenges. As businesses brace for a turbulent 2023,
fintech firms can play a vital role. Our industry can and will bounce back
quickly, driving growth, job creation and enabling businesses to reach their
full potential,” Khalid Talukder, the Co-Founder of DKK Partners, said.
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