Blockchain venture capital funding down over 43 percent in July: Report
Blockchain venture capital funding down over 43 percent in July: Report
Venture funding in the blockchain market takes a hit in July, but investors look to Web3 for the future
By Shashank Bhardwaj
Image: Shutterstock
After seven consecutive sectors of growth through 2021 and the first part of 2022, venture funding in the blockchain market appears to be slowing down with inflows into the market falling 43 percent month-on-month in July 2022. This is despite The Web3 sector continues to rule the market with a lot of investor interest, as the diminishing capital inflow signals that the crypto market may be headed for a bull run.
There is an obvious correlation between crypto’s recent downturn and the falling supply of venture capital, all of which contribute to the overall negative sentiment towards crypto this year. A Q2 Venture Capital Report by Cointelegraph shows that the average deal value in the venture capital industry fell by 16 percent to $26.8 million in the second quarter. This could also signal the end of the crypto VC train from 2021. The report covered details of deals, M&A activity, investors, crypto companies, funds and more from the crypto sector, revealing the fact that the total number of deals decreased by 26 percent in July 2022 and will surely continue to decline. Moreover, overall capital funding also took a dive by reducing 43 percent in July to $1.98 billion from June’s $3.5 billion.
Although these figures lead to uncertainty and fear in the markets, they do not seem too bad in the context of the figures from 2021. Total capital injection through 2021 was 30.5 billion dollars for the blockchain area. Total inflows in July 2022 exceed this figure with $31.3 billion in investment. The effects of widespread controversies such as the Terra collapse are also not to be taken lightly, as they caused ripple effects down the market.
In July, Web3 companies accounted for 44 percent of investments and 55 percent of a total of 141 deals closed, showing that venture capitalists are throwing their weight behind the new technologies of GameFi and Metaverse. Meanwhile, capital interest in DeFi appears to be declining, with the sector accounting for 27 percent of total funding and just 17 percent of total deals completed in July 2022. GameFi, on the other hand, took 20 percent of the 78 deals that was terminated and Metaverse claimed 17 percent.
In terms of fundraising, it has been reported that five companies received over $100 million in funding, bringing the total for the month to $15.4 billion, a 61 percent increase from the previous month. China’s Sequoia Capital China is responsible for a large portion of this figure, securing $9 million in funding, signaling the bullish investor interest in the Chinese market despite the country’s growing resilience against tech companies.
Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash
