VC Firms Make $2.6B Worth of Deals in Q1 2023 Despite Crypto Winter
The cryptocurrency market has been experiencing a bearish trend, but PitchBook’s Crypto Report for Q1 2023 shows that venture capital (VC) firms have been active in the space. The report revealed that VC firms were able to make 353 investment rounds worth $2.6 billion. This indicates that the crypto market is still alive, even during what many would consider a “crypto winter.”
Decrease in Deal Value and Number of Deals
The PitchBook report also revealed that there was a decrease in the quarter-on-quarter deal value and the total number of deals by 11% and 12.2%, respectively. This quarter also saw the lowest amount of capital invested in the crypto space since 2020. While this indicates that the market is not as strong as it was, the fact that there are still deals being made is a positive sign.
Mixed Valuation Trends
Valuation trends in the crypto space have been mixed, according to the report. Seed rounds increased by 33.3%, while late-stage rounds were up by 209.2% for the quarter compared to the entire year of 2022. However, early-stage rounds were down by 16.7%.
Positive Outlooks for the Space
While the report acknowledges that the market may continue to decline, it identifies some positive outlooks for the space. Layer-2 scaling solutions are still gaining momentum from 2022, and Blockstream raised $125 million to finance a Bitcoin mining infrastructure. Scroll, a firm building a zero-knowledge Ethereum Virtual Machine scaling solution, also raised $50 million in a late-stage VC round. These are positive signs that the market is still evolving and improving.
Sizable Investments in Custody Solution Providers
Aside from scaling solutions, custody solution providers Ledger and Taurus received significant investments in 2023. On March 30, Ledger raised $109 million due to the soaring demand for self-custody. Meanwhile, Taurus raised $65 million in a Series B on Feb. 14.
Conclusion
While the crypto market may be in a bearish trend, the PitchBook report for Q1 2023 shows that the space is still active. VC firms have been able to make significant deals, and there are positive outlooks for the market. Custody and scaling solutions continue to be popular, and investors remain interested in the space.
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