• Crypto VC investments have been declining for five straight quarters, with the latest numbers marking the low for the current cycle.
• During Q2 of 2021, $2.3 billion was invested in crypto and blockchain companies, a sharp decline from the same quarter a year earlier when $8 billion was invested.
• Despite this, deal activity has started to pick up slightly, with US-based firms leading in both investment amount raised and total deals completed.
Decline in Crypto VC Investment
Crypto financial services firm Galaxy Digital has reported that venture capital firms are continuing to invest less money in the crypto sector after five consecutive quarters of declines. In Q2 2021, only $2.3 billion was invested in crypto and blockchain companies – a sharp decline from the same quarter a year earlier when $8 billion was invested. This marks an all-time low for the current cycle and is also the lowest amount that has been invested on a quarterly basis since Q4 of 2020 – at its peak during this cycle (Q1 2022) it was $13 billion.
Deal Activity Increasing
Despite this continued decline in investment amounts, deal activity in the sector has started to increase ever so slightly. 456 deals were completed during Q2, compared to 439 deals during the prior quarter – mainly driven by an increase in Series A funding deals (174 compared to 154).
Leading Countries for Crypto VC Investment
US-based companies accounted for 45% of total VC money raised and 43% of total deals completed during Q2 2021; followed by UK, Singapore and South Korea as active countries for crypto VC investing.
Galaxy Digital commented that despite these increases in deal activity, the environment for crypto VC fundraising remains “extremely challenging” due to higher interest rates as well as many investors feeling burned after several venture-backed companies’ blowups last year.
The report concluded that while crypto VC investments have not yet found their bottom yet, increases in deal activity show promise for future growth within this industry despite difficult conditions faced by venture capitalists globally.