In 2023, venture capital firms invested a total of $10.7 billion in cryptocurrency and blockchain startups, a drastic decrease of 68% compared to the previous year’s investment of $33.3 billion. However, it still remained the third-highest year for venture capital investment in the cryptocurrency industry, indicating a trend towards diversification in investment areas.
According to data from The Block, the investment amount in 2023 surpassed the bear market of previous years, including a total investment of $6.4 billion in 2019 and 2020 combined. The majority of investments in 2023 occurred in the first half of the year, although there was a slight increase in investment in November, the overall investment amount decreased in the second half of the year.
Abhishek Saxena, the CEO of Polygon Ventures, stated that the sudden decrease in investment in 2023 is not surprising considering factors such as the macroeconomic environment, regulatory uncertainty, and the collapse of companies in the cryptocurrency industry. However, many investors and company founders were still surprised by the magnitude of the capital outflow. Nevertheless, this adjustment is considered healthy and necessary to allow the industry to self-assess and refocus on important priorities.
In terms of the number of transactions, there was a decrease in venture capital transactions in the cryptocurrency industry in 2023, with a total of 1,819 transactions completed, a 32% decrease compared to 2,671 transactions in 2022. Overall, the number of transactions in 2023 remained higher than the monthly transaction volume in 2020 and was similar to the transaction volume in 2021.
In terms of investment stages, the majority of funds in 2023 flowed into seed and pre-Series A startups, while investment activity in mid-to-late-stage startups was relatively low, consistent with the trend in 2022.
In terms of investment areas, there was strong investment in the NFT and gaming sectors in 2023, and significant attention was also given to infrastructure and Web3 domains. Compared to previous years, venture capital investment in the cryptocurrency industry appeared to be more diversified.
Looking ahead, venture capital in the cryptocurrency industry expects a significant increase in financing and transactions in 2024, in line with the recent trends in the cryptocurrency market and the bullish market outlook.
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