Series funding rounds have sprung back, albeit still remaining well below their all-time highs of $4.5 billion in monthly deals during the previous crypto market cycle.
How to Get Funded in Crypto
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Blockchain networks are information networks, which can be leveraged to build new types of tools and experiences, Variant’s Alana Levin writes.
Crypto VC Funding Slowed Last Week as $35M Raised in 9 Deals Including Uniswap DAO
Summary of blockchain project fundraising for the week of Oct. 30 to Nov. 3. Highlights included a $12M raise for Ekubo Protocol and $6.3M for the AI-based blockchain project Modulus.
Crypto VCs Dabble In $2.6 Billion Worth Of Deals In Q1 2023
Despite the prevailing bearish trend in the crypto market, venture capital firms consummated several deals worth billions in the first quarter of 2023.
Data from PitchBook’s Crypto Report for Q1 2023 disclosed that crypto firms generated $2.6 billion through 353 investment rounds.
Though the level of deals from the companies indicated the viability of the crypto space, there’s still evidence of its weakness.
Report Highlights Declines In The Number And Value Of Investment Deals
According to the report, the first quarter of 2023 had the lowest amount of capital invested in the crypto space since 2020.
The total deals declined by 12.2% from the last quarter, while the quarter-on-quarter deal value dropped by 11%.
The report highlighted that Q1 2023 marks the fourth consecutive quarter of dipping investment activity for VCs.
Notably, the number and value of VCs deals decreased by 64.4% and 78.0%, respectively, from the same quarter in 2022.
Further, the report indicated a mix in the valuation trends. Seed and late-stage rounds grew by 33.3% and 209.2%, respectively, compared with the full year of 2022. But early-stage rounds plummeted by 16.7% during the same period.
Also, the report noted that the crypto bearish trend could continue. But the space still has some positive outlooks currently.
For instance, layer 2 scaling solutions have been doing great, maintaining their growth from last year.
The data highlighted a blockchain-based firm, Blockstream, that raised $125 million for funding a Bitcoin mining infrastructure.
Also, another company committed to developing zero-knowledge Ethereum Virtual Machine scaling solutions, Scroll, has done well. The firm raised $50 million in a late-stage VC round.
Overall Decline In The Crypto Market
The crypto market has continued to show red charts as prices of most assets witness more losses. Subsequently, the cumulative crypto market cap declined over the past 24 hours. Also, the total crypto market volume plummeted 8.10% within the past 24 hours to $42.75 billion.
The primary crypto asset Bitcoin has been struggling within the past few days. According to data from CoinMarketCap, Bitcoin’s price has continuously declined for the past week.
The token dropped from the $29,000 region to the $26,000 level. The seven-day price action shows that BTC plummeted by over 9%.
At the time of writing, Bitcoin is trading at $26,759 after losing minor gains over the past 24 hours. Its market cap now sits at $511 billion, with a market dominance of 46.30%.
The altcoins are also seeing a declining price trend. Ethereum plummeted by 0.21% in the past 24 hours as the price moved to $1,800. Its seven-day active price shows a dip of over 7.40%.
-Featured image from Pixabay and chart from TradingView.com
Valuations and M&A Show Things Aren’t So Bad for Crypto
Two aspects of the crypto word, blockchain tech companies and exchanges and crypto miners, reveal that M&A activity is strong and that crypto-related companies have converged with the rest of tech, a sign that the digital-asset industry is maturing.
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Kraken’s Jesse Powell Blast FTX And Sam Bankman-Fried Without Naming Them
Leave it to Jesse Powell to say what everyone in crypto is thinking. “I’m really trying to control my rage,” the mind behind Kraken tweeted to begin his rant. In the following article, we’ll comment on several of his very interesting points. Make no mistake, though, Jesse Powell thinks this isn’t over and the crypto industry will have to work for years to make up for… some other cryptocurrency exchange’s mistake. “More business failures are sure to come as the contagion spreads,” he warned.
2/ Our good, trusting nature makes us easy targets for con artists. Some even tell us straight up that they're here for profits, not crypto, and we praise them for their honesty.
Yet we're surprised when they turn out to be who they said they are. We need to raise our standards.
— Jesse Powell (@jespow) November 10, 2022
At one point, Powell even gave the best advice possible for future crypto investors. “Don’t trust. Verify.”
What he didn’t do, though, was naming Sam Bankman-Fried, FTX, or Alameda Research. We are assuming this is all about them, but it’s just an assumption.
Jesse Powell Allegedly Blast Sam Bankman-Fried
First of all, the head of Kraken doesn’t buy the “I made a mistake” line that Sam Bankman-Fried has been feeding the public via Twitter. And Powell doesn’t mince words while saying he doesn’t.
“This isn’t about aiming high and missing. This is about recklessness, greed, self-interest, hubris, sociopathic behavior that causes a person to risk all the hard-won progress this industry has earned over a decade, for their own personal gain.”
The thing is, Sam Bankman-Fried didn’t only blow up his two billion-dollar businesses. He blew up the whole crypto industry. “We give them power to speak for us but they haven’t earned that privilege. When they blow themselves up, it’s our house, our reputation, our people which bear the brunt of the damage,” Powell tweeted. And he’s probably right about this. Everyone will have to pay for Bankman-Fried’s mistakes.
5/ The damage here is huge. An exchange implosion of this magnitude is a gift to #bitcoin haters all over the world. It's the excuse they were waiting for to justify whatever attack they've been keeping in their back pocket.
We're going to be working to undo this for years.
— Jesse Powell (@jespow) November 10, 2022
Then, in a bizarre turn of events, Jesse Powell brought bitcoin into the mix:
“An exchange implosion of this magnitude is a gift to bitcoin haters all over the world. It’s the excuse they were waiting for to justify whatever attack they’ve been keeping in their back pocket.”
What does the FTX implosion have to do with bitcoin? In fact, out of all the crypto world, bitcoiners are the less affected by all of this. In bitcoin culture, the self-custody of your assets is paramount. And people who make the effort and self-custody aren’t directly affected by exchanges blowing up and losing their customer’s hard-earned money. They are affected by the price movements these black swan events generate, though.
FTT price chart for 11/10/2022 on Binance | Source: FTT/USD on TradingView.com
Are The Media, VCs, And The US Government To Blame?
This is the most interesting part of Jesse Powell’s rant. As bitcoiners denounced Sam Bankman-Fried’s shady business model left and right, the man became a media darling like few others. His frequent political donations, the way he said what the establishment wants to hear about crypto regulation, and the whole myth about him being an effective-altruism vegan were the perfect combination.
“VCs, the media, the “experts” failed. People torched their own reputations vouching for individuals, projects, businesses they had not diligenced.”
We’re pretty sure “diligenced” is not a word, but Jesse Powell’s message stands. The media failed miserably and led retail astray. They will never admit to their wrongdoings, but Sam Bankman-Fried was on the cover of “Fortune” a couple of weeks ago. “The New Warren Buffet?” was the article’s title.
9/ Red flags:* acting like you know everything after showing up to the battle 8 years late* 9 figs buying political favor* being overeager to please DC* huge ego purchases, like 9-fig sports deals* being a "media darling", seeking out puff pieces* EA virtue signaling* FTT
— Jesse Powell (@jespow) November 10, 2022
What about VCs, though? Aren’t they at least partially responsible for financing FTX? Before you answer, read what Jesse Powell has to say about it. He’s got inside information:
“I know for a fact that VCs wrote checks blindly. Why? Because revenues were strong. Were they sustainable? Were they bleeding out money the other side? Was it all predicated on an untenable self-dealing setup, frontrunning clients, misappropriation of user funds? Never asked.”
11/ US lawmakers & regulators have some accountability too. You drove this business offshore because you refused to provide a workable regime under which these services could be offered in a supervised manner. Enforcement wrongfully focuses on convenient, on-shore good actors.
— Jesse Powell (@jespow) November 10, 2022
Last but not least, what about the US Government and its lack of crypto regulation clarity?
“US lawmakers & regulators have some accountability too. You drove this business offshore because you refused to provide a workable regime under which these services could be offered in a supervised manner.”
Jesse Powell is not saying those institutions are as guilty as Sam Bankman-Fried allegedly is, but they really dropped the ball on this one. And, as it always happens, the people suffered.
Featured Image by Luke Jernejcic on Unsplash | Charts by TradingView
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