Crypto Startup Funding Drops to Two-Year Low in Q4 2022

• Crypto startup funding has dropped significantly in Q4 2022 to its lowest level in nearly two years.
• According to PitchBook, venture capital investment in the digital asset industry declined by 75% compared to the same period in the previous year.
• FTX’s collapse in November had a further negative impact on investor confidence, resulting in a slowdown in funding for the crypto industry.

Crypto startup funding has taken a huge hit in the fourth quarter of 2022 as the crypto bear market continues. According to data provided by PitchBook, venture capital investment in the digital asset industry dropped to its lowest level in nearly two years in Q4 2022, with investment falling by 75% compared to the same period in the previous year.

The crypto space has been rocked by a bear market for most of 2022, with investors already pulling back their investments in crypto startups. However, the collapse of FTX in November had a further negative impact on investor confidence, resulting in an even greater decline in funding for the crypto industry.

Before the crash of FTX, the crypto market was seeing an influx of venture capital from large VC firms such as Andreessen Horowitz, Electric Capital, and Haun Ventures. In January 2022, FTX raised $400 million at a $32 billion valuation, a number that was unheard of at the time.

Unfortunately, the momentum of early 2022 has now been reduced to a trickle, with PitchBook’s research noting that crypto startups received $26.7 billion in funding last year alone. But the majority of this amount was raised during the first quarter, leaving the remaining quarters of the year to suffer from the bear market.

The current decline in funding in the crypto industry is a stark contrast to the bullish market of early 2022. Investors are now becoming more cautious and are not in any hurry to deploy more capital into the crypto sector. While the market may eventually recover, it will take some time before venture capitalists are willing to take on the risk of investing in the crypto industry.