Venture capital funding in the crypto industry rebounded in the last quarter of 2020 due to the ongoing cryptocurrency bear market. According to Messari's report dated October 5, $2.1 billion was raised for crypto startups in Q3 2023 with a total of 297 deals. This was down 36% from the previous quarter and 70% from the third quarter of 2022.

Seed funding was the largest fundraising category, raising $488 million across 98 deals. “Trends in transaction numbers show a significant shift from later stage projects to early stage projects over the last three years,” the researchers said. Less than 1.4% of deals involved companies from a Series B round or later.

On the other hand, strategic financing rounds have risen sharply from 0.2% of the total deal share in the last quarter of 2021 to 22% currently. The highest private equity round in the quarter was a $200 million investment in UAE-based Islamic Coin from Alpha Blue Ocean family office ABO Digital. Messari stated:

“Challenging market conditions are forcing projects to undertake short-term bridge runs or ultimately be acquired by larger projects.”

Despite regulatory uncertainty, 54% of all active venture capital investors came from the United States, more than any other country worldwide combined. Investors' appetite has shifted from user-focused applications to blockchain infrastructure, and the infrastructure has consistently generated more funding than before over the past three months.

However, “Without successful user-focused crypto applications, infrastructure investments are unlikely to deliver the desired returns, and this trend may not continue for a long time,” the researchers said. When do you think this trend will change and the crypto industry will rise again? We are waiting your comments.