VC crypto funding down 25.6% to $9.3B in first half of 2022

Investment in venture capital-backed crypto startups dipped 25.6% to $9.3 billion in the first half of 2022 compared to $12.5 billion in the first half of 2021, Crunchbase data published on July 15 shows.

However, the number of investment deals has gone up from 456 in H1 2021 to 534 in H1 2022, the data showed. This indicates that there were more smaller-sized deals in the first half of this year.

The Crunchbase report further stated that crypto startup funding reached $4.2 billion in Q2 2022, nearly the same as the little less than $4.2 billion raised in Q2 2021.

However, the Q2 2022 funding was nearly a billion less than the $5.1 billion raised in Q1 2022 and way behind the $6.1 billion raised in Q4 2021, the report stated.

One of the reasons why Q1 2022 saw more funding is because there were more large funding rounds, the report said. In the first quarter of this year, there were six rounds of $400 million or more while there was only one such round in Q2.

The report highlighted that the fall in crypto venture funding corresponds with the larger downturn in VC funding this year.

Yash Patel, general partner at Telstra Ventures, which has invested in FTX Exchange, said in the report:

“Yes, we’ve seen a pullback in crypto/blockchain investments, mirroring the broader tech markets.”

Patel added that the liquidity issues of centralized crypto lenders, among which is Celsius, have created a sense of fear among VCs and users alike. Celsius declared bankruptcy this week.

But despite the fall in overall VC funding, there are still those that believe in the long-term potential of cryptocurrencies.

In May, Andreessen Horowitz raised $4.5 billion for its fourth crypto fund — the largest fund of its kind. Earlier this week, Lightspeed Venture Partners announced the creation of Lightspeed Faction, an independent team built to invest in blockchain, after it raised over $7 billion.