- Q2 2022 has been a torrid time for crypto startups.
- Declining venture capital funding put many of these in a financial bind.
- Despite the declining funding, interest in the crypto sector is still high.
Crypto startups had a tough time in Q2 2022 after venture capitalists cut their funding for the sector further. Per a CryptoMonday analysis, these startups raised $4.2B from venture capitalists (VCs) in that period. That figure represented a 31% decline from the $6.1B it had attracted in Q4, 2021.
CryptoMonday CEO Jonathan MerryThe overall venture capital market has been cooling off since the pandemic’s onset, and this has impacted the flow of money into crypto startups. Additionally, the collapse of the crypto winter that the sector is currently experiencing has forced many investors to retreat from the sector altogether.
Merry insists that this downward trajectory indicates the difficulties the crypto sector has been experiencing since mid-2021. Since then, the market for digital currencies has experienced a prolonged bearish trend, with most major coins experiencing significant price declines. As VCs are risk averse, they have been hesitant to invest in crypto startups.
Q2 Saw a Big Dip In Large Funding Rounds
Though Crypto funding dipped in Q2 this year, the figures are an improvement on the slightly under $4.2B realized in Q2 2021. VC investment stalled in Q2 2022, with fewer large deals than the previous quarter. However, this was offset by a continued flow of smaller deals.
According to CryptoMonday, crypto startups raised much money in Q1 2022, with six funding rounds of $400 million or more. However, in the second quarter, there was only one round involving Circle Internet Financial. The Boston firm closed a $400M private equity round from a consortium that included BlackRock.
Other big rounds in the second quarter included the Germany-based Trade Republic, which attracted a Series C extension amounting to $250M in June. Likewise, Binance US, the crypto exchange with San Francisco headquarters, concluded a $200M seed round in April. And Unizen, a digital asset exchange based in Liechtenstein, raised a $200M venture round in June.
Interest in Digital Asset Space is Still High
These funding rounds reflect a continued interest in the digital asset space from traditional financial institutions and investors. With more mainstream companies entering the space, we can expect even more growth in the digital asset market in the coming months and years.
Given the recent struggles of the crypto market, it’s impressive that funding rounds for blockchain startups are still happening. The crypto market has lost most of its value from the dizzying heights it attained in mid to late 2021. But despite this plunge, crypto startups can still secure funding, which shows that there is still confidence in this industry.
