Venture capital firms are reportedly reluctant to deploy their capital into crypto investments due to the numerous collapses and bankruptcies of 2022.
Citing data from capital markets research firm Pitchbook, Reuters reports that VC investments in the crypto industry fell to an over three-year low in 2023.
During this year’s second quarter, VC investments in crypto amounted to less than $2.3 billion, according to the Pitchbook data. In the first six months of the year, VC crypto investments fell by nearly 75% year-on-year to $5 billion.
Reuters cites more data from Pitchbook showing that the number of deals in the first six months of 2023 totaled 814, down by around 56% from a similar period in 2022.
The report quotes the CEO of crypto finance firm Ledn, Adam Reeds saying that the waning interest from venture capitalists is due to the “carnage of 2022.” Last year, algorithmic stablecoin issuer Terra (LUNA) imploded while the FTX exchange and other crypto firms went out of business.
According to Reuters, most of the crypto investments that VCs have made this year were in infrastructure firms (exchanges, wallets) and other financial technology companies. This is in contrast to a year ago when the crypto sectors that attracted the largest share of funding were projects focused on non-fungible tokens (NFTs), Web3 and the metaverse.
Since VC interest in the industry rises as crypto prices go up with a lag of one to two quarters, Pitchbook says investments should increase in the second half of this year.
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The post Venture Capitalists Still Hesitant on Crypto Space After 2022’s Drama: Report appeared first on The Daily Hodl.