Crypto startups collectively raised approximately $2.34 billion globally from venture capitalists (VCs) for the second quarter (Q2) of 2023. This comes as the industry is gradually recovering from the market crisis that began during the second quarter of last year.
$2.34B Raised Across 382 Deals
According to a report by TechCrunch that cited PitchBook data, the aforementioned amount was raised across 382 deals. The highest funding for the quarter was LayerZero’s $120 million Series B round and Worldcoin’s $115 million Series C round.
Meanwhile, the Q2 raise is still a far cry from the $12.14 billion the industry raised in the first quarter of 2022. According to the report, funding for the sector has also declined for the fifth straight quarter.
Citing a statement from Lydia Chiu, the VP of business development at Ava Labs, the report attributed the decline to regulatory headwinds in the United States, forcing several crypto-related deals to be structured like traditional venture structures.
Investor Confidence Sinks
The regulatory headwinds have stifled optimism around the industry, with several traditional firms and entrepreneurs leaving the U.S. ecosystem when the market turned. In addition, the reduced market valuations that started in Q2 2022 also contributed to the decline in VC funding.
Valuations in the industry dropped severely by 50% from the first half of 2022 to the second half of 2022, according to Chiu. The report added that since then, crypto startups’ valuations have dropped an additional 15% to the first half of 2023, totaling almost 70% year-over-year (YoY).
“It’s a numbers game,” Chiu said. In general, VCs are seeing lower valuations, so they’re writing “smaller checks,” she added.
Meanwhile, the latest report comes as the industry continues to recover from the crisis of 2022. At the time of filing this report, the global crypto market capitalization stands at $1.19 trillion while the total crypto market volume over the last 24 hours stands at $37.45 billion, marking a 19.50% increase.
