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 bears that out. 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 shaken investor sentiment and wiped out $1.5 trillion in the cryptocurrency space’s market cap.
Blockchain venture capital funding has been on a downtrend since May 2022, and November was no different as inflows fell 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 total $840.4 million from $843 million in October. The Cointelegraph Research Terminal Venture Capital Database – which contains comprehensive details on deals, mergers and acquisitions, investors, crypto companies, funds and more. – shows that the number of unique transactions fell from 69 in October to 61 in November.
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It’s not all bad news, however. Despite a slowdown in crypto VC funding since May, total funding for the year surpassed 2021’s figure. Cointelegraph Research’s VC database shows a total of $36.1 billion raised in 2022, with fewer than two weeks of the year remain. In contrast, total funds raised in 2021 were $30.3 billion.
Infrastructure projects take up half of the pot in November
While the Web3 sector saw the most closed deals in November with 23, the blockchain infrastructure sector dominated 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 receives the lion’s share of funding, almost half of that amount has been secured by a single company, Matter Labs. The developer behind the Ethereum Virtual Machine-enabled zkSync announced on November 16 that it has raised a $200 million Series C funding round co-led by Blockchain Capital and Dragonfly, with participation from Lightspeed Venture Partners, Variant and the existing Investor Andreessen Horowitz has completed. The company has now raised $458 million in funding across all rounds, including $200 million from BitDAO to fund ecosystem projects.
