A report published on Monday by AltIndex.com revealed a significant downturn in funding for crypto startups, indicating a staggering decline of nearly 80 percent compared to the previous year. This year to date, crypto startups globally have raised $2.1 billion, marking a substantial drop from the more than $20 billion raised in both 2021 and 2022.
The data presented by AltIndex.com points to a challenging landscape for crypto startups seeking fresh capital in the current market. Despite the recovery from the 2022 crypto winter, investor interest in these startups appears to be waning.
“2023 has been a challenging year for crypto fundraising as investors continue pulling back, fearing risks from regulatory twists and an uncertain economy,” the report highlighted.
Crunchbase data indicates a gradual increase in funding for crypto startups over the years. In 2019, these startups raised $1.1 billion, which surged to almost $1.7 billion the following year. However, the significant surge occurred in 2021 when the crypto market exploded, with startups raising a remarkable $11.1 billion, followed by another impressive $10.1 billion in 2022.
The decline in funding is starkly evident when comparing the figures for Q1 and Q2 of this year to the same period last year. In the first half of 2023, crypto startups raised over $800 million, marking an 80 percent decrease from the previous year. The situation worsened in the following months, with the total funding plummeting by an additional 90 percent to $426 million between July and September.
The report further highlighted the continued scarcity in crypto startup funding, emphasizing that only $75 million has been raised in the past month and a half. This trend paints a bleak picture for Q4, potentially making it one of the worst quarters in recent years for funding within the crypto startup sphere.
The prevailing investor caution, stemming from concerns about regulatory uncertainties and economic instability, seems to be significantly impacting the funding landscape for crypto startups. This downturn in funding poses challenges for these ventures, signaling a notable shift in investor sentiment that may influence the trajectory of the crypto startup ecosystem in the near future.
