Blockchain Venture Capital Investments Continue to Freefall: Report

Blockchain Venture Capital Investments Continue to Freefall: Report

Cointelegraph Research has analyzed all deals and trends from venture capital in the blockchain industry during the fourth quarter of 2022. The second half of 2022 saw a dramatic decrease in capital inflows across all five major sectors of the blockchain industry: decentralized finance (DeFi), centralized finance (CeFi ), non-fungible tokens (NFT), infrastructure and Web3. The first half of 2022 saw just under $30 billion in investment, while the second half saw just $7.3 billionβ€”a dramatic drop.

As the crypto industry moves into 2023, Cointelegraph Research has looked at the data from the Venture Capital Database, which contains extensive details on deals, mergers and acquisition activity, investors, crypto companies, funds and more. Using this database, Cointelegraph Research crunches the numbers to find the most important trends in the industry. The latest report explores Q4 2022 and how it relates to the wider picture from 2018 to 2022.

Download the full report here, complete with charts and infographics.

Investments fell as of April 2022

After the fallout from the collapse of Terra in the first part of 2022, the blockchain industry could not attract venture capital back to invest in this industry as it did in 2021 and the start of 2022. There were 30.5 billion dollars invested in 2021, and 2022 was in in the process of doubling that – right up until April 2022, when everything started to slow down. September saw a brief uptick in capital investment, but it didn’t last as the year ended, with the last three months staying below $1 billion in investment.

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The number of deals also fell considerably, down to just 182 in Q4. While previous months saw large deals that were always over $100 million, only five in Q4 were over $100 million. The focus of the 182 deals remained within the Web3 sector – which includes subcategories such as metaverse, GameFi, identification and a number of others – followed by infrastructure and DeFi. NFTs and CeFi were the least popular in terms of number of deals, but just looking at these numbers can be misleading.

The most active and least active sectors relate to investments

Web3 was the most popular sector of the blockchain industry for investment, with 616 individual deals, while CeFi was the least popular, with 201 deals. Still, 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 crypto projects looking for VC or investment funding in the future may want to take into account the sector they fall into so they can better prepare.

This report subtracts Cointelegraph Research Terminals’ expansive database along with analysis from Michael Tabone, senior economist for Cointelegraph Research. Tabone has an extensive background in economics, business, finance, cryptocurrency, blockchain technology and new technologies. In addition to working for Cointelegraph Research, he is a Ph.D. candidate completing his thesis, which is focused on the theory and application of DAOs.

Keychain Ventures is a crypto investment company that invests in various funds in the blockchain space. Keychain Ventures, together with Cointelegraph Research, will present quarterly interviews with VC firms as well as crypto and blockchain projects that have recently gone through a funding round. These interviews will reveal different views on investment practices from all parties involved.

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

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