The crypto winter that began in 2022 is still lingering, as per the latest figures on venture capital (VC) funding for crypto firms presented by data analytics firm FundStrat. According to their new presentation, VC funding for crypto firms has contracted for a sixth successive quarter to $1.4 billion in Q3 2023, with the number of individual deals dropping by 30% to 214. This significant decline is a far cry from the more than $10 billion in VC funding that crypto firms secured in Q1 2022, when many crypto assets reached their all-time peaks in late 2021.
However, despite this downward trend, FundStrat highlighted that VC funding for crypto firms still remains 2-3x above its levels for most of 2018-2020. They noted, “Despite a sustained decrease in total capital investment, the crypto venture market has continued to attract more interest compared to previous market cycles.”
The Changing Landscape of VC Funding in the Crypto Industry
While crypto infrastructure firms were leading the pack in terms of investment in Q3, raising $586 million across 79 deals, their dominance in the VC crypto landscape has faded compared to Q1 and Q2. Notably, Flashbots raised $60 million in a funding round, earning the unicorn status with a valuation above $1 billion.
On the other hand, Web3 & NFTs saw a rise in funding, with $325 million raised across 55 deals. The growth in interest in social apps, such as friend.tech, contributed to this increase. FundStrat observed, “As content creators begin engaging with audiences in new formats, monetization of intellectual property becomes increasingly important.” Sound.xyz, a project aiming to change the way creators capitalize on their content, successfully raised $20 million in a series A funding round led by Andreessen Horowitz.
CeFi, which struggled to attract funding in the first half of 2023 due to the high-profile failure of centralized cryptocurrency exchange FTX, experienced a resurgence of VC interest in Q3. It became the third most funded category, although the funding was spread across fewer deals. FundStrat commented, “Investors may be looking to support CeFi companies with a proven track record rather than brand new projects.” Q3 saw a total of $226 million raised across 14 deals, with a substantial $100 million chunk going to crypto custody firm BitGo.
High-Risk-High-Reward Investment Strategy: Crypto Presales
While blue-chip cryptocurrencies like Bitcoin (BTC) and Ether (ETH) should be the core of any crypto investor’s portfolio, there is an alternative high-risk-high-reward investment strategy that could offer potentially exponential near-term gains – investing in crypto presales. In a crypto presale, investors purchase tokens of up-and-coming crypto projects to support their development. These tokens are usually sold at discounted prices, and historically, presales have delivered substantial exponential gains to early investors.
Cryptonews, a trusted source for crypto insights, has curated a list of 13 favorite crypto presales for 2023 to help investors navigate this investment strategy. However, it is essential to remember that crypto is a high-risk asset class, and this article is provided for informational purposes only and should not be considered investment advice.
