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Investors Unfazed by Dip in Crypto Funding in Q1

Crypto-Focused Venture Capital investors are trucking along in their work. Many remain confident in their investment strategies despite a turbulent first-quarter market for crypto startup fundraising. Others notice a more marked drop in the pace of investment.

“I certainly saw a big slippage and a drop in activity [in] western markets,” in the first quarter of 2023, said David Gan, founder and general partner of OP Crypto. “I don’t think people are rolling out massively, and rounds are taking a lot longer to complete than ever before.”

In the first quarter, $2.53 billion in capital was raised across 347 crypto and blockchain companies, down 79% from $12.27 billion in the prior year quarter and a decline of about 18% from the $3.08 billion raised by the same cohort of companies in the prior quarter, according to preliminary PitchBook data.

The stark contrast to the prior year quarter is not surprising. The crypto world was in a different place back then. FTX, for example, was still a major crypto exchange and raised $400 million, bringing its total capital raised to $2 billion and giving the company a valuation of $32 billion at the time.

The climate has since changed: FTX crashed and Terra/Luna crashed (and dropped $40 billion with it). Meanwhile, a series of Chapter 11 bankruptcy filings have taken place at crypto mega-institutions including FTX, BlockFi, Three Arrows Capital, Celsius Network, Voyager Digital and Genesis Global Trading.

The past quarter has been a “thaw of people wanting to open their checkbooks,” said Michael Terpin, CEO of Transform Ventures. “Right after FTX, predictably no one wanted to invest in anything.”

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