VC funding for blockchain falls for first time since 2020

Global blockchain funding fell by 29% quarter-over-quarter with the US hit hardest

Blockchain venture capital                                 
Europe remained the only global region with quarter-on-quarter growth in blockchain venture funding and deals – Photo: Shutterstock

Venture capital funding focused on blockchain dipped in the second quarter of 2022 to $6.5bn as a result of wider-market uncertainty, macroeconomic pressures and growing concerns about the stability of the crypto market.

New research by market intelligence platform CB Insights has found that global funding fell by 29% quarter-over-quarter, with the United States reporting the biggest decline of more than 40% quarter-over-quarter. 

Meanwhile, it seems as though European firms remained optimistic about the future of crypto as the region reported a growth in blockchain venture deals at $1.4bn, but remained significantly behind the $3.4bn that went to US-based companies.

In addition, Europe was the only region in the world with quarter-on-quarter growth in blockchain venture funding (40%) and deals (18%) in Q2 of 2022.

Web 3.0 start-ups make up 57% of funding

The report found that mainstream adoption and interest in Web 3.0 businesses continued throughout the second quarter, with Web 3.0 start-ups accounting for more than half of blockchain funding (57%) for the second straight quarter, reaching $3.7bn. 

Funding noticably shifted away from crypto exchanges towards non-fungible tokens (NFTs), gaming, decentralised finance (DeFi) development, with six of the top 10 biggest deals in Europe going to Web 3.0 start-ups. 

The amount of blockchain unicorns created also dipped by more than 50% from the record high of 16 in the first quarter of 2022 to just eight in Q2 2022. The most valuable unicorn start-up was Seychelles-based crypto exchange KuCoin, which recently surpassed decacorn status after hitting a $10bn valuation.

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