VCs not interested in blockchain because funding is slowing down
The second half of 2022 brought a visible decline in investment from VCs (venture capitalists) across all key blockchain industry sectors, according to the latest report published by Cointelegraph Research.
Although the value of funding raised for the entire year was greater than $5 billion, which was higher than in 2021, there was a significant decline between June and December. Specifically, in the last three months of the year, funding came in at just $2.3 billion and fell to $660 million in December.
The report categorizes the blockchain industry into five main sectors: centralized finance (CeFi), decentralized finance (DeFi), infrastructure, Web3 and non-fungible tokens (NFT). In the first half of the year, financing amounted to 30 billion dollars, which is almost as much as the whole of 2021.
When it looked like the record number would be doubled, the crypto winter and the collapse of more crypto-oriented businesses made VCs less keen to invest their funds. As a result, the total amount raised in H2 2022 was $7.23 billion, gradually falling more each month, as shown in the chart below.
Web3 was the most active part of the blockchain industry
The number of transactions in the fourth quarter fell to 182, with only five exceeding $100 million. Within this group, investments in the Web3 sector, which includes Metaverse and GameFi, proved to be the most popular. In contrast, the least common investments were in NFTs and CeFi.
Throughout 2022, the Web3 sector accounted for 616 deals, while CeFi only accounted for 201. Interestingly, the funding value was the same at $9.2 billion for both. In addition, the average transaction for Web3 was valued at $15.4 million, while in CeFi it was estimated at $45.6 million.
DeFi attracted $3.1 billion in 299 deals and NFTs $3 billion in 243 sales. The infrastructure sector proved to be the most profitable; of the 295 completed financing deals, companies were able to raise nearly $12 billion in capital, which is an average of $40.1 million per deal.
The data was confirmed in a separate report from Crunchbase. It showed that funding for Web3 startups fell by nearly $7 billion in the fourth quarter of 2022, from $9.3 billion to $2.4 billion. Despite the drastic decline in the latter part of the year, the whole year 2022 turned out to be quite positive for Web3 companies.
Watch the recent FMLS22 panel discuss back office technology in the fintech industry.
Fintech funding coincides with Blockchain investments
It is not just blockchain startups and young companies that have suffered in 2022, but also the wider financial technology (fintech) sector. According to Innovative Finance, global support for fintech
Fintech
Financial technology (fintech) is defined as ay technology that is aimed at automating and improving the delivery and use of financial services. The origin of the term fintechs can be traced back to the 1990s where it was primarily used as back-end system technology for recognized financial institutions. However, it has since grown outside of business with an increased focus on consumer services. What purpose do Fintechs serve? The main purpose of fintechs will be to deliver
Financial technology (fintech) is defined as ay technology that is aimed at automating and improving the delivery and use of financial services. The origin of the term fintechs can be traced back to the 1990s where it was primarily used as back-end system technology for recognized financial institutions. However, it has since grown outside of business with an increased focus on consumer services. What purpose do Fintechs serve? The main purpose of fintechs will be to deliver
Read this term the sector has shrunk to $95 billion, or by 30%. The number of completed transactions fell by almost 1,000 to 5,263.
The UK fintech industry was more resilient to adverse conditions. In the UK, the value of funding fell by just 5% to $10.2 billion.
“London’s fintech industry has consistently proven to be both resilient and ambitious in the face of economic challenges. As businesses prepare for a turbulent 2023, fintech companies can play an important role. Our industry can and will bounce back quickly, and drive growth, job creation and enabling businesses to reach their full potential,” said Khalid Talukder, co-founder of DKK Partners.
The second half of 2022 brought a visible decline in investment from VCs (venture capitalists) across all key blockchain industry sectors, according to the latest report published by Cointelegraph Research.
Although the value of funding raised for the entire year was greater than $5 billion, which was higher than in 2021, there was a significant decline between June and December. Specifically, in the last three months of the year, funding came in at just $2.3 billion and fell to $660 million in December.
The report categorizes the blockchain industry into five main sectors: centralized finance (CeFi), decentralized finance (DeFi), infrastructure, Web3 and non-fungible tokens (NFT). In the first half of the year, financing amounted to 30 billion dollars, which is almost as much as the whole of 2021.
When it looked like the record number would be doubled, the crypto winter and the collapse of more crypto-oriented businesses made VCs less keen to invest their funds. As a result, the total amount raised in H2 2022 was $7.23 billion, gradually falling more each month, as shown in the chart below.
Web3 was the most active part of the blockchain industry
The number of transactions in the fourth quarter fell to 182, with only five exceeding $100 million. Within this group, investments in the Web3 sector, which includes Metaverse and GameFi, proved to be the most popular. In contrast, the least common investments were in NFTs and CeFi.
Throughout 2022, the Web3 sector accounted for 616 deals, while CeFi only accounted for 201. Interestingly, the funding value was the same at $9.2 billion for both. In addition, the average transaction for Web3 was valued at $15.4 million, while in CeFi it was estimated at $45.6 million.
DeFi attracted $3.1 billion in 299 deals and NFTs $3 billion in 243 sales. The infrastructure sector proved to be the most profitable; of the 295 completed financing deals, companies were able to raise nearly $12 billion in capital, which is an average of $40.1 million per deal.
The data was confirmed in a separate report from Crunchbase. It showed that funding for Web3 startups fell by nearly $7 billion in the fourth quarter of 2022, from $9.3 billion to $2.4 billion. Despite the drastic decline in the latter part of the year, the whole year 2022 turned out to be quite positive for Web3 companies.
Watch the recent FMLS22 panel discuss back office technology in the fintech industry.
Fintech funding coincides with Blockchain investments
It is not just blockchain startups and young companies that have suffered in 2022, but also the wider financial technology (fintech) sector. According to Innovative Finance, global support for fintech
Fintech
Financial technology (fintech) is defined as ay technology that is aimed at automating and improving the delivery and use of financial services. The origin of the term fintechs can be traced back to the 1990s where it was primarily used as back-end system technology for recognized financial institutions. However, it has since grown outside of business with an increased focus on consumer services. What purpose do Fintechs serve? The main purpose of fintechs will be to deliver
Financial technology (fintech) is defined as ay technology that is aimed at automating and improving the delivery and use of financial services. The origin of the term fintechs can be traced back to the 1990s where it was primarily used as back-end system technology for recognized financial institutions. However, it has since grown outside of business with an increased focus on consumer services. What purpose do Fintechs serve? The main purpose of fintechs will be to deliver
Read this term the sector has shrunk to $95 billion, or by 30%. The number of completed transactions fell by almost 1,000 to 5,263.
The UK fintech industry was more resilient to adverse conditions. In the UK, the value of funding fell by just 5% to $10.2 billion.
“London’s fintech industry has consistently proven to be both resilient and ambitious in the face of economic challenges. As businesses prepare for a turbulent 2023, fintech companies can play an important role. Our industry can and will bounce back quickly, and drive growth, job creation and enabling businesses to reach their full potential,” said Khalid Talukder, co-founder of DKK Partners.
