Venture capital (VC) has played a crucial role in the growth of the digital asset industry over the past two years.
According to data from Pitchbook, VC investments in crypto skyrocketed in 2021, reaching $25.1 billion, which is a sevenfold increase compared to 2020’s $3.4 billion. And while 2022 in crypto was not for the faint of heart, crypto VC’s still managed to deploy a record high of $26.2 billion.
Across the board, valuations on practically all projects rose significantly during the 2020-2021 bull market, but as the market contracted throughout 2022, VC’s also started to see valuations of investments taking a heavy nosedive.
This was of course fuelled by the changes happening in the surrounding macroeconomic picture where a shift in economic and fiscal policy started to greatly influence the economy. And to top things up, the crypto domain suffered greatly in the wake of the industry-specific implosions happening with FTX and TerraLuna.
Crypto VC Funding Resilient Amidst 2022’s Bear Market
Seasoned crypto professionals are well aware that the cyclical bear markets are not something for the faint of heart, and that valuations cut in half or even worse are well within the norm of an ordinary bear market. Regardless, 2022 stands out as one of the toughest years for crypto to stomach since its inception.
Nonetheless, the VC market still witnessed some action. Several big players in the industry such as Andreessen Horowitz (a16z) and Sequoia Capital launched billion-dollar funds dedicated to Web3, DeFi, NFTs and the metaverse. Many other funds had similar success in their funding rounds.
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