Crypto-focused venture capital investors ride along in their work. Many remain confident in their investment strategies despite a jittery Q1 fundraising market for crypto startups. Others are noticing a sharper fall in the pace of investment.
“I definitely saw a big slippage and drop in activity [in] Western markets,” said David Gan, Founder and General Partner of OP Crypto in Q1 2023. “I don’t think people are betting heavily, and rounds are taking much longer to close than ever before.”
In the first quarter, $2.53 billion in capital was raised from 347 crypto and blockchain companies, down 79% from $12.27 billion in the year-ago quarter and down about 18% from of $3.08 billion raised by the same company cohort in the prior quarter, according to preliminary PitchBook data.
The stark contrast to the quarter a year ago is not surprising. The crypto world was in a different place back then. For example, FTX was still a prominent crypto exchange and raised a $400 million round, bringing the total capital raised to $2 billion and giving the company a valuation of $32 billion at the time.
The climate has changed since then: FTX collapsed and Terra/Luna collapsed (bringing down $40 billion). Meanwhile, a series of Chapter 11 bankruptcy filings have been filed with mega crypto institutions, including FTX, BlockFi, Three Arrows Capital, Celsius Network, Voyager Digital, and Genesis Global Trading.
The past quarter was a “thaw of people wanting to open their checkbook,” said Michael Terpin, CEO of Transform Ventures. “Right after FTX, it’s predictable that nobody wanted to invest in anything.”