Crypto VC funding down by 82.5% YOY, lowest in 2 years

Crypto startups raised $660 million in VC funding in December 2022 – down 21.5% from November (2022) and 82.5% from December 2021 ($3.76 billion), according to a report by Wu Blockchain.

The number of crypto VC public investment projects in December 2022 was 50 – a 23% decline from November 2022 (65 projects) and a 68% decline from December 2021 (154 projects). In addition, December saw the lowest number and amount of financing in the last two years.

Infrastructure crypto firms received the largest share of funding in December 2022, at about 22%. While CeFi, DeFi, and NFT/GameFi sectors accounted for about 8%, 18%, and 16%.

With $100 million, Aztec Network became the most funded crypto firm, an L2 privacy solution using ZK Rollup. After Aztec, Fleek protocol generated $25 million in funding, and Web3 startup Nillion received $20 million.

However, Haun Ventures secured the highest funding of $1.5 billion in 2022.  Huobi Global takes second place with $1 billion in funding, and Flow ecosystem comes in third with $750 million in funding.

As a result of bullish optimism and funding surges for non-fungible tokens (NFT) and decentralized finance projects, venture capital investments in blockchain startups reached a record $25.2 billion in 2021. However, following a wave of collapsed firms like hedge fund Three Arrows Capital, lender Celsius Network, and exchange giant FTX, funding slowed in 2022.

VC funding diminished globally.

Global venture capital funding in November 2022 was $22 billion –  down 69% from $70 billion in November 2021 and down by 19% month-over-month.

While deal-making declined and crypto had a troubled year, Web3 and DeFi still attracted investment, surpassing fintech and biotech.

There has still been $18.3 billion poured into the space until Q3 2022, outpacing the second most backed space of fintech, which has raised $13.4 million.