According to Galaxy Research, 2022 was a successful year for venture capital investments in the crypto sphere with a high level of activity. Yet, the research also suggests that the crypto venture capital environment has become increasingly difficult for both founders and investors.
Disruptions in the market and macroeconomic headwinds lead to a decline in venture capital investment in the cryptocurrency ecosystem. One key trend highlighted in the research is the decline in pre-seed deals, which have been in decline for several years. This trend is leading to stricter demands from investors, making it more difficult for entrepreneurs to fundraise.
The report suggests that in order for crypto startups to gain successful momentum in 2023, they need to prioritize their financial and operational stability. Their goal should focus on controlling the expenses of the company and aim to increase revenue from the first quarter to the last.
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Alex Thorn, the head of Galaxy Research tweeted questioning whether the trends in Q4 of 2022 will continue in 2023.
Trading and investing platforms and tools have seen the highest levels of capital invested, highlighting the importance and maturity of market infrastructure in the crypto ecosystem within 2022.
The report also included details about the startup environment in the United States. U.S. remains the dominant player in the cryptocurrency startup space, with companies based in the country accounting for more than 40% of deals in the Q4 of 2022.
Although the crypto startup success seems like it’s going to be a lot more demanding than in 2022, the previous statistics also suggest a hopeful year ahead.
In other news, Mastercard encouraged blockchain startups in the Q4 of 2022.