Posted January 13, 2023, 7:03am
Driven by the excitement of the NFT market and a new high in the bitcoin price, 2022 has started with a bang for cryptocurrency and blockchain-denominated projects. In the wheel of a record year, 2021, more than $30 billion was invested last year by venture capital funds in industry start-ups. “By the start of 2022 the words Web3 and NFT were on everyone’s lips, with an explosion of ratings, and fundraising turning into exuberance,” rewinds Luc Jodet, partner of the XAnge fund dedicated to Web3.
Bottom line: Venture capital funds invested more than $13 billion in more than 1,100 deals in the first quarter, the largest quarterly sum ever placed, according to data from digital asset investment firm Galaxy. With important figures, such as the 359 million dollars raised by Animoca brands, the company behind the development of the sandbox, or the 450 million raised by Yuga Labs and its monkeys, the bored monkey. Two mega-highs on a valuation of over $4 billion, and positioned in segments severely tested by the collapse of the NFT market and disenchantment around the metaverse.
But a crypto crash later and the collapse of a major stablecoin the irrigation of the entire sector has made it possible to rationalize investor expectations. The number of operations and invested capital thus melted away every quarter of the year, to close the last one with the lowest number of operations and invested capital since 2018.
In total, the cryptocurrency and blockchain firms raised $2.7 billion in the fourth quarter from 366 transactions, down more than 50% from the third quarter, when they raised $6 billion, from 676 transactions.
“Rising rates, deteriorating macro conditions and turmoil in asset markets have combined to reduce investors’ risk appetite in the cryptocurrency sector,” Galaxy’s report analyzes.
“Since November and the FTX case, there was a real freeze in terms of investments, and the end of the pause was booed by the regulators ”, explains Luc Jodet. “When we see for example the impact of FTX on Genesis [un courtier crypto, NDLR]we understand that there are Augean stables to be cleaned in certain projects”, he says, welcoming this “sanitization” which allows the industry to be sorted.
Deadline for funded projects
Projects Web3 and NFT labels dominated the number of deals, accounting for more than a third of closed deals for the year. On the other hand, companies developing infrastructure tools and platforms for trading again raised the bulk of funds. Often more mature projects, such as ConsenSys, Circle, Amber or Polygon.
“Institutional investors’ appetite to invest and understand the sector remains very strong despite the turbulence,” said Luc Jodet. More than $33 billion was awarded to 200 specialist crypto funds in 2022.
This enthusiasm represents a significant increase from 2021, which saw $19.4 billion raised by 140 venture capital funds. “The last six months of 2023 will be interesting to follow, continues the XAnge partner. Because currently many entrepreneurs are postponing their fundraising. »
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