VC funding for crypto firms plummets

Last year was brutal for cryptocurrency and the sector is still feeling the pain when it comes to fundraising.

As the graphic above from Fortune shows, venture capital raised by crypto firms has plummeted in 2023. While the data from Pitchbook only runs through mid-May, it still shows startling figures, with crypto firms having raised only US$500 million so far this year. In comparison, the sector secured US$21.6 billion for the whole of 2022.

The Fortune article cites the FTX collapse and the Terra crash as two major disasters last year that led to the bear market.

See also: Crypto regulation heat map: Where does your country rank?

Fortune also notes that the nature of many of these investments has contributed to the difficulties the market is going through now. Several VC firms opt to receive a crypto project’s tokens instead of shares.

As these tokens are publicly traded, there’s nowhere to hide if a VC firm’s holding isn’t performing well. This is in stark contrast to traditional investments, where it can take much longer for bad news to start impacting the market.