Meda Singh
(Reuters) – Research firm Pitchbook said on Thursday that total funding for cryptocurrency startups this year is expected to surpass 2021 investments, but a series of crypto explosions has pushed private equity into the market. The pace of capital deployment has slowed as it has sapped the appetite for investment.
Cryptocurrency projects attracted $19.9 billion in venture capital (VC) investment worldwide in the first nine months of 2022, a 41% increase from a year ago, according to Pitchbook data. In total, we raised a record $21.2 billion last year.
However, the amount of capital invested has trended downward throughout the year, with only $4 billion invested in the third quarter, down 38.3% quarter-on-quarter and the lowest since the second quarter of 2021. Pitchbook said.
Last month’s FTX collapse rocked investment sentiment and squashed cryptocurrency market cap by $1.5 trillion, amid a series of shutdowns of major market players this year including Celsius, Voyager, major tokens terraUSD and Luna. It was most shocking.
“The lack of clear regulation and guidance remains one of the biggest concerns and limiting factors in the cryptocurrency industry,” said Robert Lee, a cryptocurrency analyst at Pitchbook.
“Until better guardrails are in place in the form of established laws and guidelines, mainstream adoption is unlikely.”
Many FTX backers, including Singapore’s state investor Temasek Holdings, SoftBank Group’s Vision Fund and Sequoia Capital, cut their investments to zero after the crypto exchange filed for bankruptcy.
“This bearish sentiment will continue into next year,” said Adam Struck of LA. said. Based venture capital firm Struck Capital.
VCs injected $1.5 billion into the so-called Web3 companies in the third quarter, growing 44.5% quarter-on-quarter, according to Pitchbook.
Web3, a term used to describe the potential next stage of the internet, is the only crypto to see an increase in capital invested in the quarter due to its relative isolation from the day-to-day price fluctuations of crypto tokens. was a segment. Lu said.
(Reporting by Meda Singh, Bengaluru; Editing by Danya Ann Toppil)