Crypto Sector Attracts Over $700M in Funding Entering 2023

YEREVAN (CoinChapter.com) – 2022 wreaked havoc on the crypto market, as the digital assets shaved over 1.5 trillion off their total valuation. However, despite the crash, crypto funding recovered for the first time since September after raking in $709 million in Jan 2023.

The most active funds included Multicoin Capital, Coinbase Ventures, Andreessen Horowitz (a16z), and Pantera Capital.

Segment distribution of funds was uneven.

As the chart below demonstrates, the funds were not distributed evenly between different segments.

Moreover, the number of segments was also limited due to the investors’ low-risk attitude. Each VC laid out its priorities. For example, certain segments, such as centralized finance platforms, got less attention across the board.

Most investors chose to focus on blockchain service platforms and saw high returns in the DeFi future.

The latest 2023 Pantera Capital report also reiterated their interest in DeFi, singling the segment as a leading force behind crypto.

Also read: Bitcoin price over $22K – bull market cycle or dead cat bounce?

Crypto funding continues despite the bear market

Pantera Capital CEO Dan Morehead emphasized that “private market deal activity continued.” albeit slower towards the end of 2022. As the sector no longer yielded high rewards in 2022, global funding decreased accordingly.

Morehead also asserted that private market valuations “tend to lag behind public market pricing.” 

Compared to the previous bear markets, this last bull market saw the rise of consumer crypto and other sectors such as DAOs (decentralized autonomous organizations), crypto gaming (play-to-earn model), NFTs (non-fungible tokens), and the Web3 creator economy.

read the letter.

Thus, the CEO underscored the importance of the DeFi sector for the new upcoming bull market.

Pantera Sees DeFi Leading the New Bull Run

The executive posted a pie chart representing Pantera’s crypto-related deal count by sector. As a result, DeFi found most investors at 42%. However, further analysis revealed the importance of Web3 development within the DeFi sector. Notably, Web3 developers continued heightened activity, despite the weak inflow of funds.

We believe this is a tremendous time to start a company in the blockchain space. Talent is more educated and passionate about the industry than in previous cycles. A plethora of capital has been raised and is awaiting deployment.

read the report.

Morehead also noted that DeFi is the foundation for the next crypto cycle. He added that centralized entities failing due to hacks, greed, or illegal activity is a “tale as old as financial markets.” “Actual crypto, like the on-chain, smart contract, protocol-based crypto, really mitigates these problems,” commented the CEO.

Venture Capitalists Underwater, Anyway

Notably, the Pantera fund itself was in a shaky position throughout the market downturn. It lost 71% from Jan to Sep 2022.

However, Pantera isn’t the only crypto fund experiencing a hit. The Wall Street Journal reported that Andreessen Horowitz’s crypto fund fell by 40% in H1 2022. The drop was much more significant than the “10% to 20% drops reported by other venture firms.”

Also read: Russia-Operated Giant ADVcash Feeding Binance? Let’s Dive.

Despite the losses, Morehead says, “blockchain’s resilience in the face of a terrible macro market for risk assets and historic idiosyncratic disasters is impressive.”