Maybe the second half of 2023 will have more capital invested in crypto, but maybe not

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Welcome to Chain Reaction.

In the first half of 2023, funding for crypto startups continued to become scarce. In the second quarter, venture capital entering the industry fell for the fifth consecutive quarter since the first quarter of 2022 to $2.34 billion globally, as investors held back their checkbooks, fearing the risks of a regulatory position severe and of an uncertain economy.

According to data from PitchBook, the $2.34 billion tally for the second quarter was lifted on 382 deals, but that’s a sharp drop from the industry peak of $12.14 billion hit in the first quarter. quarter 2022. The largest increases in Q2 2023 were LayerZeros $120 million Series B round and Worldcoins $115 million Series C.

It’s a numbers game, said Lydia Chiu, vice president of business development at Ava Labs. In general, investors see lower valuations, so they write smaller checks, she told TechCrunch+.

total crypto-VC capital fell in the second quarter for a 5th consecutive quarter

but we still see a bunch of small transactions transpiring

maybe not such a bad thing – just less overhyped and more realistic rounds and ratings

— Jacquelyn Melinek (@jacqmelinek) July 6, 2023

Either way, it seems that the old corporate adage that big companies can always increase seems to apply to crypto as well, regardless of the US regulatory system’s view of the sector. Many projects that have superstar teams and amazing use cases will still be competitive, Chiu said. The offers that everyone wants will continue to be sought.

This market has been bearish for a long time, and psychologically it’s not easy, said Lasse Clausen, founding partner of early-stage crypto investment firm 1kx. Were left with contractors who want to build whether they raise money or not. There aren’t many people like that, who go against the grain and take risks.

But in the long run, Clausen thinks the determination of these few founders will pay off.

The last capsule

For last week’s episode, Jacquelyn interviewed Jack Lu, co-founder and CEO of NFT Marketplace Magic Eden. This is his second time on Chain Reaction, but the market has moved on a lot since he last came in August 2022, so we were excited to see him back!

Before co-founding Magic Eden in 2021, Lu worked as a product manager at Google and a consultant for Boston Consulting Group.

Magic Eden originally started as an NFT trading platform based on Solana, but has expanded its support to other blockchain networks like Polygon, Ethereum, and Bitcoin. Today, it has grown into one of the largest NFT marketplaces with over 8,000 collections, approximately $3 billion in NFT transactions, and 22 million unique monthly visitors. In June 2022, Magic Eden raised $130 million in a Series B round that granted it unicorn status.

We explained why Magic Eden has extended its support to other blockchains, adding support for BRC-20 tokens to its secondary platform, and how the company plans to stay competitive in an ever-changing market.

We also talked about:

NFT Market Volatility Royalties Web3 Games Expansion Tips for the NFT Community

Subscribe to Chain Reaction on Apple Podcasts, Spotify or your favorite pod platform to keep up with the latest episodes, and leave us a comment if you like what you hear!

Follow the Money CryptoQuant raised $6.5M in Series A round Privacy-focused platform Ola raised $3M in seed round Mind Network raised 2, $5m to help secure data, smart contracts and AI for web3 protocol DeFi AlloyX raised $2m in pre-round Outdid raised $2.5m in pre-round round table to improve privacy verification

This list was compiled with information from Messari as well as TechCrunch’s own reports.

Follow me on Twitter @Jacqmelinek for the latest crypto news, memes and more.

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