VC investment in crypto companies continued to fall in the first quarter of 2023, but despite the current regulatory turbulence for cryptocurrencies in the United States, it remains first in the number of companies raising capital according to a new report.
An April 11 report from Galaxy Research, the research arm of cryptocurrency investment firm Galaxy Digital, said the $2.4 billion invested by venture capitalists in the first quarter of 2023 was the lowest amount invested since last quarter of 2020.
CRYPTO VC IN LOOKS INTO THE ABYSS
The first quarter saw the lowest crypto VC activity in 2 years with $2.4 billion invested in 439 deals.
investment is down, valuations are down, VC fundraisings are down. find out why, see all the data and learn what the future holds pic.twitter.com/b3JKPjNfzz
— Alex Thorn (@intangiblecoins) April 11, 2023
Venture capital investments have been falling since peaking at nearly $13 billion in the first quarter of 2022, and the latest quarter results represent a decline of more than 80% compared to the same time last year. .
The report noted that data on venture deals is often reported at a later time, meaning the $2.4 billion figure quoted may be revised in the future.
While capital investment has fallen since the fourth quarter of 2022, the report noted that the number of deals actually done had increased by nearly 20% and theorized that an apparent correlation between cryptocurrency prices and invested capital could cause VC activity to pick up after strong price gains at the end of the first quarter.
INVESTMENT IN CRYPTO VC
Despite the downward trend in invested capital, deal activity grew in Q1 2023, with 439 deals done vs. 366 in Q4 2022. Just 42 pre-seed deals. pic.twitter.com/RECGCwhaKG
— Alex Thorn (@intangiblecoins) April 11, 2023
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While various statistics and anecdotal evidence suggest that crypto companies are leaving the US to find greener pastures, citing factors such as regulatory clarity and friendlier tax policies, Galaxy found that US-based companies are on the rise. The next closest is France with 19.4%.
Capital investments for crypto companies during the first quarter of 2023 by country. Source: Galaxy Digital
While the Galaxy report has included investment jurisdictions since Q3 2022, the US share of crypto VC investment has fallen just 2.8 percentage points since then.
France appears to be the biggest winner, as equity investments for French-based crypto firms rose to 19.4% in the latest quarter from less than 5% in Q3 2022.
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This post Crypto VC Funding Hits 2-Year Low, US Firms Still the Favorite: Galaxy Research
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