As the crypto market witnesses the dawn of a new bull run in 2023, the landscape for fundraising within the digital asset space is evolving rapidly. With blockchain technology gaining mainstream recognition and institutional interest in cryptocurrencies on the rise, 2023 has proven to be a pivotal year for innovative projects seeking capital infusion
As we explore the top crypto fundraisings, we will also attempt to decipher the potential market direction in 2024. The crypto space is known for its dynamic nature, characterized by both rapid innovation and market volatility.
Crypto fundraised events for 2023
In 2023, the crypto funding landscape faced considerable problems, with total investments falling by 68% to $10.6 billion. This steep decline contrasted sharply with the total investment of $33.2 billion reported in 2022, and it constituted the lowest point since 2020.
Historically high-interest rates, the rapid rise of artificial intelligence shifting focus away from crypto, regulatory crackdowns, and the aftermath of prominent crypto crashes involving FTX, Celsius, and BlockFi all contributed to this decrease.
The digital asset and blockchain sector witnessed a significant decrease in Q3 2023, with only $1.975 billion in investment, the lowest level since Q4 2020 and marking a new cycle low. This continuing decline began following a peak of $12 billion in Q1 2022.
There is currently an urgent need for a comprehensive analysis to understand the present condition of funding in Web 3, blockchain, and crypto.
Wormhole, a project that allows developers from different blockchains to communicate with one other, announced one of the year’s largest fundraising as 2023 came to a conclusion, according to Crunchbase’s Web3 tracker.
Wormhole’s team said that it had collected $225 million at a $2.5 billion valuation after completing its split with market maker and VC Jump Crypto. Brevan Howard, Coinbase Ventures, and Jump Trading, of which Jump Crypto is a spinoff, were among the participants. Wormhole officials told Fortune in an interview that the deal was solely for yet-to-be-released tokens rather than shares in the company.
This is the first evidence that Wormhole, best known for a $320 million attack on its protocol in February 2022, intends to introduce a coin. Shortly after, LayerZero, a direct competitor and another between-blockchains messaging system, revealed that it, too, will create its own coin.
Fundraisers shape the industry’s adoption
Infrastructure was likely the year’s crypto buzzword, but there was still opportunity for out-of-the-box, eye-catching firms to cash in, the most dystopian of which proved to be Worldcoin, which wants to scan your eyeballs to confirm you’re human.
Tools for Humanity, Worldcoin’s developer, reported in May that it had raised $115 million in a Series C fundraising round led by Blockchain Capital, with participation from a16z crypto and Bain Capital. Worldcoin is backed by Sam Altman, the CEO of ChatGPT inventor OpenAI, and aims to tackle the problem that Altman is arguably creating: a world overtaken by AI.
Blockchain.com, which runs a digital assset wallet and an exchange, raised a sizable $110 million in a Series E round headed by Kingsway Capital in November. The only snag? The funds were raised at a less than $7 billion valuation, which is less than half of what investors expected the firm to be worth in March 2022.
According to Bloomberg, Tiger Global reduced its stake in the NFT marketplace by 94% and its investment in Bored Ape Yacht Club developer Yuga Labs by 69%.
Q3 2023 count
According to Messari’s State of the industry’s Fundraising report, issued on Thursday, crypto businesses collected US$2.1 billion over 297 deals in Q3, which is 36% less than in Q2.
The majority of investments were concentrated in early-stage funding rounds, with seed capital accounting for a total of $488 million raised across 98 rounds.
Series B and later-stage investments declined to a 1.4% deal share in Q3, down from 8% in Q4 2020.
This is indicative of strategic bear market positioning as investors attempt to fund projects with asymmetric upside that can return greater multiples when market sentiment eventually shifts in a positive direction.
Messari
The global digital asset market cap is down 63% from its all-time high of US$3 trillion in November 2021.
The bear market has produced financial issues for some big crypto companies, including New York-based digital asset intelligence firm Chainalysis, which reportedly let off 150 employees this week.
