VC spending patterns confirm that 2022 was a bad year for cryptocurrencies. When FTX went down in November, it was the latest and most stunning in a string of bankruptcies of key market participants this year. It shook investor confidence and wiped nearly $1.5 trillion in market value from the cryptocurrency ecosystem.
Investment in blockchain startups has declined since May 2022, and November saw an even steeper drop in financing. While this is true, overall capital inflows for 2022 surpassed 2021 levels by nearly $6 billion. Some major cryptocurrency firms contributing to this statistic include Polygon, Circle, Consesnsys, Yuga Labs, and the now-defunct FTX and FTX US.
Popular names draw Investors
The layer-2 blockchain platform Polygon announced a $450 million funding round headed by Sequoia Capital with backing from Tiger Global and SoftBank. Polygon’s MATIC token had a market capitalization of $13 billion at its peak but is now worth less than $7 billion.
ConsenSys announced in March a $450 million Series D sponsored by ParaFi Capital, valuing the firm at $7 billion. Since then, the firm has come under fire for privacy concerns around its products, while Lubin has stated that the fundamental issues are being addressed.
In March, Andreessen Horowitz led a $450 million funding round for Yuga labs, the firm behind the massively successful Bored Ape Yacht Club. Despite being valued at $4 billion following the investment round, the NFT market has dried up, and Yuga Labs is apparently under SEC investigation for selling unregistered securities.
USDC issuer Circle announced a $400 million funding round in April, with backing from well-known investors like BlackRock and Fidelity. With a $9 billion valuation, the business made moves to go public via a SPAC merger, but the deal fell through in December due to regulatory concerns.
FTX group raked in $800 million
The companies who drove the 2022 bear run are, ironically, the ones who received the lion’s share of VC funding in crypto. In January, FTX US, the American arm of the FTX exchange, secured $400 million in Series A financing at an $8 billion valuation. Like its counterpart, the offshores FTX global also raised $400 million in January via a Series C funding round from the same backers.
