The venture funding explosion in the blockchain sector in 2021 and the first half of 2022, which is often a lagging indicator of the sector’s health, appears to be cooling off after seven consecutive sectors of growth.. According to Cointelegraph Research, inflows into the blockchain venture capital market are down 43% month-over-month in July 2022.
The Web3 sector, including GameFi and the metaverse, continues to command the majority of investor interest. Nevertheless, The decline in capital inflows should be seen in context, as the figures are close to the same period in 2021, when the cryptocurrency market was in a bullish phase.
Capital inflows plummet in July
Even Bitcoin’s most bullish maximalists seem resigned to the bleak reality of a long, cold winter, as crypto prices trail off with the odd bounce, at best. Venture capital firms are not immune to negative sentiment, confirming that the recent slump in crypto is beginning to be reflected in private finance.. As revealed in Cointelegraph Research’s recently released Q2 Venture Capital Report, the average deal value in the venture capital industry has decreased by 16% to $26.8 million in Q2, and the engine of the 2021-2022 crypto venture capital train is probably running out of steam.
From Cointelegraph Research Terminal’s VC database containing comprehensive details on deals, mergers and acquisition activity, investors, cryptocurrency companies, funds and more, it outlines that in July, the total number of deals decreased 26% month-on-month. month, and average deal values continue their downward trend.
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Global equity financing plunged 43% in July to $1.98bn, down from $3.5bn in June. It’s easy to look at these numbers in a negative light, but compared to 2021, the venture capital market appears to be in a much healthier state.. Total capital inflows throughout 2021 were $30.5 billion for the blockchain space. In July, 2022 total inflows surpassed that figure with $31.3 billion in investments this year, despite difficult macroeconomic conditions that saw the cryptocurrency market see some bankruptcies and controversies like the Terra crash in May.
Web3 attracts the most interest from investors
Venture capital firms changed their investment strategy in the second quarter, favoring Web3 over decentralized finance (DeFi). This trend continued in July, with Web3 companies accounting for 44% of investments and 55% (78) of the 141 closed deals. Equity interest in decentralized finance continues to decline as this sector accounts for 27% of total funding and only 17% of deals closed in July. Additionally, GameFi took 20% of the 78 closed deals and metaverse companies accounted for 17%.
Download and purchase this report at Cointelegraph Terminal Research.
For a full analysis of the blockchain venture capital sector in July, check out Cointelegraph Research’s recently released monthly “Investor Insights” report. The research team breaks down the major market events of the past month and the most critical data across industry sectors, including venture capital.
July Fundraising Bonanza
Fundraising figures for July mark a different pattern than the sharp decline in completed venture capital deals, with five companies raising more than $100 million in funding. Total fundraising in July was $15.4 billion, an increase of 61% from the $9.5 billion raised in June. Having previously backed a number of cryptocurrency and blockchain-related companies, Sequoia Capital China alone raised $9 billion in July, demonstrating bullish investor interest in the Chinese market despite China’s crackdown on the companies. technological.
Venture capital financing has already passed the year 2021
Investor interest is shifting to Web3, and uncertainty in the DeFi space is affecting investor sentiment. The cryptocurrency market slump and an uncertain macroeconomic outlook are weighing on private finance, but the outlook remains positive. With monthly declines in global funding, deals and deal value, venture capital market inflows remain on par with Q2 2021, when the market was in a bull phase.
The article is pulled from Cointelegraph Research Terminal’s expansive venture capital database. This article is for informational purposes only and does not represent investment advice, investment analysis, or an invitation to buy or sell financial instruments. Specifically, the document is not intended as a substitute for individual investment or other advice.
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