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Blockchain VC Investments Continue In Freefall: Report

Cointelegraph Research has analyzed all venture capital transactions and trends in the blockchain industry during Q4 2022. The second half of 2022 saw a drastic decline in capital inflows across the five main sectors of the blockchain industry: Decentralized Finance (DeFi), Centralized Finance (CeFi), Non-Fungible Tokens (NFTs), Infrastructure and the Web3. The first half of 2022 brought in just under $30 billion of investment, while the second half saw just $7.3 billion, a dramatic drop.

As the crypto industry heads into 2023, Cointelegraph Research has examined data from its Venture Capital Database, which contains comprehensive details on deals, mergers and acquisition activity, investors, crypto companies, funds, and more. Using this database, Cointelegraph Research crunches the numbers to find the biggest industry trends. Their latest report explores the fourth quarter of 2022 and how it relates to the bigger picture of 2018 to 2022.

Download here the full report, with graphs and infographics.

Investments decrease from April 2022

In the aftermath of the Terra collapse in the early part of 2022, the blockchain industry did not seem to be able to attract VC again to invest in this industry as it did in 2021 and early 2022.. In 2021, USD 30.5 billion were invested, and 2022 was on track to double that figure, right up until April 2022, when everything began to decline. There was a brief uptick in equity investment in September, but it was not sustained through the end of the year, and the last three months were below $1 billion in investment.

The number of operations also dropped considerably, to just 182 in the fourth quarter. While in the previous months the large operations always exceeded USD 100 million, in the fourth quarter there were only five above that figure. The 182 deals were focused on the Web3 sector—which includes subcategories such as metaverse, GameFi, id, and many others—followed by infrastructure and DeFi. NFTs and CeFi were the least popular in terms of number of trades, but the numbers can be misleading.

The most active and least active sectors tie in investment

Web3 was the most popular sector of the blockchain industry for investment, with 616 individual trades, while CeFi was the least popular, with 201 trades.. However, both sectors brought in a total of $9.2 billion in 2022. The average deal for Web3 was $15.4 billion, compared to CeFi’s average of $46.6 million. Blockchain and cryptocurrency projects seeking venture capital funding or investment in the future may want to pay attention to which sector they belong to in order to better prepare.

Blockchain VC Investments Continue In Freefall: Report

This report is drawn from the extensive Cointelegraph Research Terminals database along with analysis by Michael Tabone, a senior economist at Cointelegraph Research. Tabone has extensive experience in economics, business, finance, cryptocurrency, blockchain technology, and emerging technologies. In addition to working for Cointelegraph Research, he is completing his doctoral thesis, which focuses on the theory and application of DAOs.

Keychain Ventures is a crypto investment firm that invests in different funds in the blockchain space. Keychain Ventures, along with Cointelegraph Research, will feature quarterly interviews with venture capital firms, as well as cryptocurrency and blockchain projects that have recently gone through a funding round. These interviews will reveal diverse views on the investment practices of all parties involved.

The opinions expressed in this article are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.


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