After a tumultuous year in crypto, investors are now more selective in their funding.
It’s been a tough year for crypto and venture capital activity confirms it. FTX’s collapse in November was the latest and most shocking in a series of shutdowns by major market players this year – including Celsius, Voyager and BlockFi – that have rattled investor sentiment and wiped out 1.5 trillion dollars in market capitalization of the cryptocurrency space.
Blockchain venture funding has been on a downward trend since May 2022 and November was no different with inflows dropping even further. However, total capital inflows for 2022 exceeded 2021 by nearly $6 billion.
According to Cointelegraph Research, venture capital funding fell 4.8% in November to $840.4 million from $843 million in October. Cointelegraph Research Terminal’s Venture Capital Database – which includes comprehensive details on deals, M&As, investors, crypto companies, funds and more – shows that the number of unique deals is fell from 69 in October to 61 in November.
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It’s not all bad news, however. Despite a slowdown in VC crypto funding since May, total funding for the year topped the 2021 tally. Cointelegraph Research’s VC database shows a total of $36.1 billion raised in 2022, with less than two remaining weeks of the year. In contrast, total funds raised in 2021 was $30.3 billion.
Infrastructure projects take half the pot in November
While the Web3 sector closed the most deals in November with 23, the blockchain infrastructure sector held the largest share of investor dollars. The sector attracted more than half of the funding in November, securing $483.9 million in venture capital.
Although the infrastructure sector gets the lion’s share of funding, nearly half of that amount was secured by a single company, Matter Labs. The developer behind zkSync compatible with the Ethereum virtual machine announced on November 16 that it had closed a $200 million Series C funding round co-led by Blockchain Capital and Dragonfly and co-led by Lightspeed. Venture Partners, Variant and existing investor Andreessen Horowitz are participating. The company has now raised $458 million in funding across all rounds, including $200 million from BitDAO to fund ecosystem projects.
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For a comprehensive analysis of the VC blockchain sector in November, check out Cointelegraph Research’s monthly “Investor Insights” report. The research team breaks down the main events that have influenced the market over the past month and key data from different industry sectors, including venture capital.