Crypto VCs Make $2.6B Worth of Deals in Q1 2023
Despite a persistent bear market in the cryptocurrency space, venture capital (VC) firms have continued to make significant deals in Q1 2023, underlining the resilience of the industry during a period often referred to as the “crypto winter.”
An Overview of the Crypto VC Landscape
According to the Crypto Report from PitchBook for Q1 2023, crypto companies managed to raise a staggering $2.6 billion across 353 investment rounds. These figures provide compelling evidence that the crypto industry remains active, albeit not as robust as in its peak periods.
However, the report also shows an 11% decrease in quarter-on-quarter deal value and a 12.2% decrease in the total number of deals. Q1 2023 also marked the lowest amount of capital invested in the crypto space since 2020.
Mixed Valuation Trends in Crypto VC
The report reveals mixed trends in valuation. Seed rounds saw a 33.3% increase, and late-stage rounds experienced a whopping 209.2% rise for the quarter compared to the entire year of 2022. On the flip side, early-stage rounds dipped by 16.7%.
While the report suggests that the downward trend may continue, it also identifies potential areas of growth within the industry.
Layer-2 Scaling Solutions Gain Momentum
Layer-2 scaling solutions continue to build momentum from 2022, despite the overall downturn. Notable examples include Blockstream, which raised $125 million to fund a Bitcoin mining infrastructure, and Scroll, a firm creating a zero-knowledge Ethereum Virtual Machine scaling solution, which raised $50 million in a late-stage VC round.
Custody Solution Providers Secure Significant Investments
In addition to scaling solutions, custody solution providers also received substantial investments in Q1 2023. On March 30, Ledger raised $109 million as the demand for self-custody solutions surged. Simultaneously, Taurus secured a hefty $65 million in a Series B round on February 14.
In conclusion, while the crypto bear market persists, venture capital firms remain actively involved in the space. The mixed valuation trends and the continued momentum in layer-2 scaling and custody solutions provide a glimpse of the resilience and dynamism that characterize the cryptocurrency industry.