While the crypto space suffers due to the bear market, VC firms are still bidding in 2023, proving the space is alive despite the “crypto winter”.
According to the PitchBook Crypto Report for Q1 2023, cryptocurrency companies raised $2.6 billion in 353 investment rounds. While it shows that the space is still active, it’s clearly not as strong as it used to be.
The report reveals an 11% decline in the value of deals quarter-over-quarter and a 12.2% decline in total deals. Besides, the quarter also saw the lowest amount of capital invested in the space since 2020.
The report also noted that valuation trends have been mixed. Seed rounds are up 33.3%, and late-stage rounds are up 209.2% in the quarter compared to all of 2022. However, early-stage rounds are down 16.7%.
While the report acknowledges that the decline may continue, it also identified some positive prospects for the space. Data shows Layer 2 scaling solutions may continue their momentum from 2022. The report cited Blockstream, which raised $125 million to fund a bitcoin (BTC) mining infrastructure, and Scroll, a company building a zero-knowledge Ethereum Virtual Machine scaling solution, which raised $50 million in a late-stage venture capital round.
In addition to scaling solutions, custody solution providers Ledger and Taurus received significant investments in 2023. On March 30, Ledger raised $109 million by firing the self-custody lawsuit. For its part, Taurus raised $65 million in a Series B round on February 14.
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