Investment in Crypto VC Drops 70% in One Year: Report

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Venture capital investments in cryptocurrency companies have fallen by more than 70% in the past 365 days, according to information published by RootData, a crypto data provider. During the month of June 2022, the digital asset space received $1.81 billion in 149 rounds, while this year only 83 projects saw $520 million, the most funded month yet.

RootData’s numbers show a clear downward trend for VCs interested in the digital asset space, despite several months in between that managed increases. September 2022 was the highest on record, for example, with $1.85 billion in funding, investing in a second-best 138 rounds. And June of last year had the most recipients, with 149 rounds.

Crypto fundraising trends. Source: RootData

According to the data platform, the infrastructure category is leading the way, with $213 million in funding last month for 26 projects. Still, that’s down nearly 50% from the previous month, when 28 projects received $410 million.

Gensyn AI, a UK-based startup, was the category winner, with a whopping $43 million in a Series A round led by a16z crypto.

CeFi, or centralized funding, which includes companies like OPNX and Chilizis, is the second most funded category, receiving $101 million, generating nearly 20% of all funding. Games placed third, with $62 million, more than half of which went to Mythical Games, which raised $37 million in its C1 round. DeFi and NFT complete the list of categories, in that order.

Over the past year, Ethereum has funded 1,826 projects, followed distantly by Polygon (MATIC), with 1,076 rounds of funding. Separated by location, the United States received 34% of the most funding by any country on their list, although that seems ripe for a change.

The platform names Coinbase Ventures as the most active VC, having participated in 71 rounds last year, followed by Hashkey Capital and Shima Capital, financing 54 and 49 projects respectively.

The former high-flying crypto asset class has taken a back seat to other investments, namely artificial intelligence.

In a previous interview with Decrypt, Mysten Labs co-founder and CEO Evan Cheng said this change is due to the ability of AI products and applications to cater to a wider audience as the industry crypto continues to focus on itself.

However, Cheng sees the AI ​​as complementary to Web3. One example is Justin Suns, the new $100 million AI development fund.

The dwindling interest of venture capitalists in the crypto asset space could also be due to various other reasons. The dismal actions of companies such as FTX and Terra could be to blame, as well as the banking turmoil that took down the four crypto-friendly banks. Added to this is the recent regulatory crackdown in the United States, the country that nonetheless paved the way for crypto investments.

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