VC Investments Experience Decline in July, but Crypto Sector Shows Signs of Resilience
Summary:
July saw a 10.26% drop in venture capital inflows, raising $700 million. Macroeconomic conditions and geopolitical events continue to influence VC decision-making. However, notable outliers in the crypto VC sector include Polychain Capital and CoinFund, who raised $200 million and $152 million respectively. Infrastructure and Web3 remain active sectors, with significant investments made in July. Yet, the overall investment trend remains uncertain.
Venture capital inflows experienced a 10.26% decline in July, raising $700 million, as reported by Cointelegraph Research VC Database. The recent months have shown a rejection of the potential upward trend, with macroeconomic conditions and geopolitical events weighing heavily on the decision-making process of venture capitalists. Firms are adopting a risk-off approach, while others are allocating some capital to value investments. VCs are diligently evaluating each project for investment opportunities, preferring to follow established trends. Despite the challenges, there are some positive developments in the crypto VC sector. Polychain Capital launched an Investment Fund IV worth $200 million, while CoinFund launched a Seed Fund IV raising $152 million in July. These standout cases contrast with the less significant fundraising activity in June. The anticipation of spot Bitcoin exchange-traded funds (ETFs) gaining approval in the U.S. is generating excitement, as it has the potential to invigorate the industry and trigger the next cryptocurrency bull run. Approval from the SEC for such ETFs would signal confidence for VCs and attract more attention and capital. However, it remains to be seen if this will reverse the investment trend. Infrastructure and Web3 sectors remain prominent, with 26 deals raising $256.2 million in Web3 and $279 million invested in infrastructure across 24 deals in July. Decentralized finance (DeFi) followed with $140.1 million, and centralized finance and nonfungible tokens (NFTs) were also active. Notably, Polygon and Binance Labs were involved in multiple funding rounds in July, supporting projects like 0xBoost Finance, Aethir, Dappos, and Delabs Games. Despite these activities, the top raisers in July were Web3 startup Zyber 365, securing a $100 million Series A round and becoming a fintech unicorn valued at over $1.2 billion, and infrastructure solution provider Flashbots, concluding a Series B round of $60 million. Flashbots aims to mitigate the negative impact of maximal extractable value on the Ethereum blockchain. Additionally, Futureverse, an artificial intelligence (AI) metaverse startup, successfully raised $54 million in a Series A round from 10T Holdings and Ripple. Futureverse aims to expand its ecosystem by combining 11 startups from various fields, including blockchain, AI, NFTs, and gaming. Despite the decline in investment activity in July, driven by a lack of investor participation, the potential approval of Bitcoin and Ether ETFs in Europe and the U.S. could alter the VC landscape. However, a quick return to a steady upward trend in the blockchain industry is unlikely.
Published At
8/24/2023 4:14:00 PM
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