Crypto VC Funding Declines in 2023 as Lack of Innovation and Trading Volume Impact the Space
Summary:
Venture capital funding for the crypto space has declined in 2023 compared to the previous year, with low trading volume and a lack of new innovations being cited as reasons. Tony Cheng of Foresight Ventures advises founders to focus on survival and profitability during the bear market.
Venture capital funding for the crypto sector has experienced a significant decline in 2023 compared to the previous year. In the first and second quarters of 2022, a combined total of $20.3 billion flowed into the space through VC funding. However, this year has seen a lackluster performance. During Q1, approximately $2.6 billion in crypto VC deals were made, followed by around $2.1 billion in Q2, making it one of the worst periods for crypto fundraising. To shed light on the current VC funding landscape, Cointelegraph's Zhiyuan Sun spoke with Tony Cheng, a partner at Foresight Ventures, a crypto investment firm. Cheng discussed how the lack of new innovations may be causing venture capital firms to back away from the crypto space and shared advice for founders on surviving the bear market. He also addressed the issue of whether companies should focus on user growth or profitability. According to Cheng, most of the widely talked-about narratives such as layer-2 solutions, zero-knowledge, and nonfungible tokens (NFTs) have lost momentum due to low trading volume on exchanges and in decentralized finance (DeFi). Additionally, Cheng noted that limited market activity and the number of users have prevented significant traction in any direction. Nevertheless, Cheng remains optimistic, suggesting that a better macro landscape and increased enthusiasm for the next crypto cycle could turn things around. When asked about accepting funding offers with less favorable terms, Cheng emphasized the importance of survival, urging founders to take as much capital as possible in the current uncertain climate. He stressed that founders must prioritize self-preservation, as failing to do so would lead to the undoing of years of hard work. In the context of the bear market, Cheng argued against the "growth at all cost" approach, stating that companies should focus on achieving profitability and ensuring their survival.
Published At
9/12/2023 11:58:44 AM
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