Crypto VC Investments Continue to Take a Hit, Drop Another 10% MoM

There has been a significant decline in publicly disclosed investment projects by crypto venture capitalists (VCs) during the month of October.

Data from RootData indicate a 10% month-on-month decrease, with only 75 investment projects recorded compared to 83 projects in September 2023, as reported by Chinese reporter Wu Blockchain. 

This also marks a substantial year-on-year decrease of 45% when compared to the 135 projects reported in October 2022.

The report mentioned that these statistics may experience future revisions as not all financing is immediately announced.

Meanwhile, in terms of investment allocation, infrastructure projects accounted for approximately 24% of the financing, followed by decentralized finance (DeFi) at 21%, centralized finance (CeFi) at 9%, and non-fungible tokens/GameFi at 13%.

In terms of total financing amount, October witnessed a decline of 20% compared to the previous month, with a total of $430 million invested.

This is in stark contrast to the $530 million recorded in September 2023.

Moreover, the year-on-year decrease is even more pronounced, plummeting by a staggering 63% from the $1.15 billion invested in October 2022.

Notable Funding Rounds in October

Despite the overall decline, there were still notable funding rounds exceeding $12 million.

Blockaid, a web3 security development company, secured $33 million in financing through a seed round involving prominent investors such as Sequoia Capital, Greylock Partners, and Cyberstarts.

As reported, Blockaid has teamed up with MetaMask to introduce a new feature aimed at bolstering user security.

Another standout funding round involved Blackbird, a provider of loyalty and connectivity tools for restaurants, which completed a $24 million Series A financing round led by a16z.

SynFutures, a decentralized derivatives exchange, raised $22 million in its Series B round led by Pantera Capital, and Membrane Labs, a cryptocurrency trading and lending platform, secured $20 million in its Series A financing round.

Gaming company NEON Machine also made waves with the completion of a $20 million financing round led by Polychain Capital, while Binance announced the launch of its 39th new coin mining project, Memecoin (MEME).

Additionally, RWA lending platform Untangled Finance completed a $13.5 million financing round and unveiled its launch on the Celo network.

The decline in crypto VC investments reflects a cautious sentiment within the industry, potentially driven by regulatory uncertainties and market volatility.

However, as of late, investor sentiment has improved, as evident from the increase in digital asset fund inflows.

Digital asset investment funds saw a record $326 million in net outflows last week, marking the largest single week of inflows since July 2022.

The surge in investor interest can be attributed to growing optimism surrounding the potential approval of a spot-based Bitcoin exchange-traded fund (ETF) by the US Securities and Exchange Commission (SEC).

“Month-to-date inflows are now close to half a billion dollars,” CoinShares said in a recent report, noting that this indicates an increase in investor confidence.