Q2 2023 Crypto Fundraising Report

Key Takeaways

• Crypto VC funding has continued its downtrend since peaking in the beginning of last year. $2.4 billion was raised in the second quarter, marking the fifth consecutive quarter of declines in total fundraising, while deal count ticked up marginally compared to Q1 ’23 to 306 deals.
• Despite a decline from peak levels, the crypto VC market remains robust, with current funding more than four times the previous bear market. The positive narratives around Blackrock's Bitcoin ETF application and Ripple's legal victory may potentially stimulate the private market in H2 2023.
• Deals have been smaller and concentrated in the early stages as there are likely fewer winners worth doubling down on at lofty valuations. Only 5% of deals were over $25 million, while 68% fell under $10 million, on par with first quarter levels.
• Similar to Q1, infrastructure remained the most heavily invested vertical, raising over $1.2 billion in Q2. This trend persists as many of the fundamental components required to scale the crypto industry are still in demand. However, token sales have been experiencing a decline due to projects being cautious about potential regulatory scrutiny in the U.S. regarding the offering of unregistered securities.
• Bottom Line – Despite a sustained decrease in total capital investment, the crypto venture market has continued to attract more private investor interest compared to previous market cycles. Potential tailwinds in the second half of 2023 include the increased likelihood of a spot Bitcoin ETF approval and most of the U.S. monetary tightening in the rearview mirror.