Crypto VC Funding Falls as Firms Become More Selective

The lengthening crypton winter has put the brakes on venture capital interest and investments in the sector. However, some projects are still garnering attention from VC firms and institutions.

Venture capital firms have slowed with their crypto investments this year as the bear market drags on. 

Crypto VC Dries Up in 2023

On September 1, Ethereum advocate Evan Van Ness said, “You’ve probably seen posts that “crypto VC” activity is down,” before adding that it is not a demand-side problem.

“While there are many zombie funds, there is still plenty of money. The problem is not enough good startups. This is just where we are in the cycle.”

According to DeFiLlama, crypto funding fell to $283 million in August. Investments have fallen 75% from the same month in 2022 when investors put $1.15 billion into the market.

Moreover, investors poured more than $7 billion into the market at the peak of the last bull market in November 2021, in just one month.

“The bear market has killed frothy valuations,” agreed crypto researcher ‘Emperor Osmo’ who added that allocations today are more carefully selected. The researcher took a look at the five projects that are still generating attention. 

Pendle Finance is a project that provides tokenized yield and real-world assets (RWA). Binance is a major investor, and the platform has seen total value locked surge 850% since the beginning of this year. 

Maple Finance is another tokenized real-world asset marketplace for institutional investors. In August, it raised $5 million to facilitate market expansion into the APAC and LATAM regions.

Read more: What’s the Relation Between Venture Capital Investment and Crypto Market Prices?

NFTs and Bitcoin Staking in Favor

NFT marketplace Drip Haus raised $3 million in August amid a massive slump in NFT volumes. The platform lets users receive free NFTs from their favorite creators and keep track of NFT airdrops. 

Ellipsis Labs is the team behind Phoenix, the first instant settlement DEX and liquidity hub on Solana. On August 17, it announced a $3.3 million seed round led by Electric Capital. 

Bitcoin liquid staking platform Stroom also raised $3.5 million in August, adding to the list of projects that are still attracting venture capital.

According to DeFiLlama, several protocols, including Tako Protocol, DeForm, FirstMate, and Raleon all raised seven-figure sums over the past couple of weeks.