Crypto industry executives remain positive about the sector’s long-term prospects despite a drop in VC funding.
based on numbers From crypto data provider RootData, the second quarter of last year saw the lowest amount of funds raised by crypto companies since data tracking began in Q3 2021, with $2.17 billion raised.
The amount compares to $2.47 billion in the prior quarter and $3.36 billion in the fourth quarter of 2022.
At its peak in the first quarter of 2022, startups in the crypto industry raised $12.64 billion in a whopping 558 fundraising rounds, the data showed.
The improvement is already noticeable
commenting Commenting on Cointelegraph’s downtrend, head of structuring and fundraising at Web3 accelerator Outlier Ventures Gvantsa Chkuaseli said things have already started to pick up after a slowdown in the fourth quarter of last year.
“We can see with our own portfolio, such as Mawari’s recent $6.5 million seed round co-led by Blockchange Ventures and Decasonic, and Zinc’s $5 million Series A, that there is interest despite challenging conditions,” Chkuaseli said.
He added that some investors even seem unfazed by the recession and are investing in early-stage crypto companies as before.
“[…] there are reasons to be optimistic,” Chkuaseli said.
Others, like Saqr Ereiqat, co-founder of Crypto Oasis, a Dubai-based venture capital firm, noted that there are many positive lessons companies can take from the recent downturn.
“On the plus side, this change allows for a more demanding selection process, ensuring that only the most promising projects receive funding,” he explained, adding:
“In addition, tough times serve to crystallize winners, separating the truly innovative startups from the rest.”
But while there are positive lessons to be drawn, Ereiqat also conceded that the bear market and slump in VC funding have been difficult for the industry.
“It is discouraging to see many companies facing the risk of extinction due to the scarcity of financing opportunities,” he said, noting that the situation highlights the importance of proper strategic decision-making for all companies.