US Dominates Crypto Venture Capital, Attracts Nearly Half Of All Funding

Q2 2023 saw a high level of venture capital (VC) engagement in the cryptocurrency industry, with the United States securing the lion's share of the investments. A recent report released by Galaxy Digital reveals the landscape of VC funding for crypto firms during this period.

Crypto & Blockchain Venture Capital - Q2 2023

The crypto and blockchain sector saw $2.32bn invested in Q2 2023, marking a new cycle low and the lowest since Q4 2020, continuing a downtrend that began after a peak of $13bn in Q1 2022.

GalaxyAlex Thorn Head of Firmwide Research

While the total funding slightly fell short of Q1 levels, standing at around $2.32 billion, deal activity witnessed an uptick. The quarter ended with 456 agreements inked, a slight increase from the 439 deals recorded in Q1.

Early-Stage And Metaverse Projects Most Attractive

A considerable 73% of these deals were in the early stages, encompassing Pre-Seed, Seed, and Series A funding rounds. US-based crypto firms topped the charts in both the number of finalized deals, accounting for 43%, and in secured funds, amassing 45% of the total investment.

Following the US, Singapore and the United Kingdom each accounted for 7.5% of completed deals, with South Korea coming in fourth at 3.1%.

The average venture capital funding per crypto company in Q2 2023 stood at $3 million, against an initial projection of $17.93 million. The quarter also witnessed the emergence of ten new VC funds focused on the cryptocurrency market, though they collectively raised a mere $720 million, marking the lowest point since Q3 2020.

Trading, exchange, investment, and lending startups were the most appealing to investors, securing 20% ($473 million) of all capital. In close competition, Web3, NFT, Gaming, DAO, and Metaverse startups attracted 19% ($442 million) of the investments. However, the latter category topped the list in terms of deal count.

Interestingly, companies dedicated to developing privacy products experienced the most significant growth in deals, showing a 275% increase, followed by infrastructure projects at 114%.

A corroborating study by PwC reveals rising interest in crypto assets among hedge funds. Furthermore, over half of American citizens under 18 years old chose crypto as their preferred financial investment, indicating a promising future for the crypto sphere.

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