2023 could be a rocky year for crypto venture investments: Galaxy Research
Last year was a big one for crypto venture capital despite multiple high-profile meltdowns and the FUD (fear, uncertainty, and doubt) tsunami that followed. However, the funds may not flow as easily this year, a crypto researcher warns.
The number of deals and amount invested by venture firms into Web3 and crypto startups was a little over $30 billion in 2022, according to Galaxy Research
Galaxy’s head of firmwide research, Alex Thorn, described it as a “monster year” that was only just eclipsed by the $31 billion in VC investments in 2021.
However, in a Jan. 5 report, Thorn stated that macroeconomic and crypto market conditions led to significant investment drawdowns in Q3 and Q4. This will likely continue into 2023, until macro and crypto market conditions improve.
Thorn noted that there were 2,900 venture deals in 2022, though the fourth quarter saw the fewest deals and the lowest capital invested in two years.
more than $30bn was invested in crypto startups by venture investors in 2022 across 2900 deals, an absolutely monster year that was only beaten by 2021. but that isn't remotely the whole story... pic.twitter.com/khduDKDZhd
If this trend continues, crypto and Web3 firms may struggle to raise funds in 2023, Thorn suggested.
He added that declining company valuations and stricter demands from investors will bring about a more difficult fundraising environment for entrepreneurs.
“Startups will need to be laser-focused on fundamentals, taming operational expenses and driving revenue in 2023,” he continued.
The United States regulatory environment will also have implications since America still dominates the crypto-startup ecosystem.
More than 40% of all crypto venture capital deals last year involved a U.S.-headquartered
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