Q3 2023 Crypto Fundraising Report

Key Takeaways

• Crypto VC funding has continued its downtrend since peaking at the beginning of last year. $1.4 billion was raised in the third quarter, marking the sixth consecutive quarter of declines in total fundraising, while deal count dropped 30% from Q2 ’23 to 214 deals.
• Despite the decline, current funding remains more than 2x-3x levels seen from 2018 to 2020. The increased likelihood of spot ETF approvals and a potential improvement in the macroeconomic environment could provide tailwinds to the private market in Q4 and into 2024.
• Deals remain concentrated in the early stages as there are likely fewer winners worth doubling down on at lofty valuations. Only 1% of deals were over $50 million, while 62% fell under $10 million, staying consistent with 1H 2023 levels.
• Infrastructure maintained its status as the most invested vertical, albeit by less of a margin compared to Q1 and Q2. CeFi saw an uptick in fundraising across fewer deals as investors may be looking to support well-established companies given the poor track record of CeFi institutions in 2022.
• Web3 social apps are becoming popular among crypto users and have gained the interest of venture capitalists. To dovetail with new forms of social media, companies focused on intellectual property and creator monetization have also garnered interest from investors.
• Bottom Line – Despite a sustained decrease in total capital investment, the crypto venture market has continued to attract more interest compared to previous market cycles. Potential tailwinds to end 2023 include the increased likelihood of a spot Bitcoin ETF approval and most of the U.S. monetary tightening in the rearview mirror.