Venture Capitalists Invest $29 Billion In Crypto Companies In 2022

The collapse of the cryptocurrency market in 2022 has harmed the majority of enterprises in the field; a factor anticipated to affect the influx of investors. To advance their fundraising activities, venture capitalists are unconcerned by the substantial sell-off.

Cryptocurrency startups have raised more than $29 billion in 2022, which is $2 billion less than the $31 billion amount recorded in 2021.

Notably, the businesses raised around $5.5 billion in 2020, which increased by over 40% in 2021, riding the market bull run that concluded in Bitcoin reaching an all-time high of almost $68,000.

Crypto VC funding chart. Source: Cointelegraph

DeFi is the most well-funded venture

According to the research, the majority of the financing was allocated to specific categories, including decentralised finance (DeFi) at 16%, centralised finance (CeFi) at 14%, non-fungible tokens (NFTs) at 13%, and infrastructure at 14%.

The various fundraising rounds were dominated by the crypto VC firm Andreessen Horowitz, which raised $2.2 billion in Q1 and $4.5 billion in Q2.

Sequoia raised $500 million elsewhere in Q1, followed by $850 million for Southeast Asia and $2 billion for India in Q2. In addition, FTX ventures ranks third with a $2 billion fund and 11 investments.

Caution while approaching new transactions

The analysis found that venture capitalists are cautiously approaching investment opportunities to avoid the crypto sector’s weaknesses in light of the market crash.

After viewing investments in this business in real-time, it is difficult not to believe that we are still on the same inevitable, if rough and bumpy, trajectory.

Several cryptocurrency enterprises, including Three Arrows Capital (3AC) and Voyager Digital, declared bankruptcy due to the market decline in 2022. The majority of organisations have been compelled to alter their operations to manage the turbulent market.

On July 20th, the bitcoin exchange Coinbase highlighted the absence of risk mitigation procedures as the primary reason for the failure of multiple companies. The concerned companies were carried away by the bull market of 2021 and neglected the fundamentals of risk mitigation.

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