VC Funding For Crypto Strong Despite Bear Market

Venture capital (VC) funding for crypto firms hit $17.5 billion in the first half of 2022, making it likely to top the $26.9 billion recorded in 2021.

Venture capital (VC) firms are poised to break last year’s record of investments into crypto and blockchain startups in the face of a severe crypto winter that has sent numerous cryptocurrencies to multi-year lows. According to new data from PitchBook, VC firms have injected $17.5 billion into blockchain and crypto startups in the first half of 2022, on track to exceed the $26.9 billion these firms raised in 2021.

VCs on Track to Break Last Year’s Record For Crypto Investments

In the face of a sharp crypto market drawdown this year, VC funding for blockchain and crypto startups is on track to break the 2021 record. According to market insight provider Pitchbook, VCs have invested $17.5 billion into such firms in the first half of 2022, compared to the $26.9 billion that was invested in 2021.

The data suggest that VC investors’ faith in the growth prospects of these crypto companies has not been significantly affected by the current market environment. Many major cryptocurrencies, including Bitcoin and Ethereum have taken a battering in the recent period, less than a year after these assets hit all-time highs.

Record-high inflation, a series of aggressive interest rate hikes by central banks this year, and the crash of the algorithmic stablecoin TerraUSD and LUNA have pushed investors away from cryptocurrencies. The world’s largest cryptocurrency, Bitcoin, is down roughly 65% from its all-time high of almost $69,000 it hit in November 2021, while the valuation of the entire crypto market has shrunk by two-thirds to $1 trillion.

Roderik van der Graf, the founder of Hong Kong crypto-focused investment firm Lemniscap, said,

“The current market conditions – I don’t think they faze investors. The capital available is massive.”

North America Remains the VC Hub for Crypto

North America has been a VC funding hotspot over the past few years, and the latest data from Pitchbook showed that this has remained unchanged. The region has recorded $11.4 billion in VC investments into crypto and blockchain startups in the first half of 2022, compared to $15.6 billion for 2021.

On the other hand, VC activity dropped to $144.2 billion in the United States during the first six months of the year, down from $158.2 billion in the same period last year.

VC funding in Europe also remained strong, with the region recording $2.2 billion of VC investments in the first half of 2022. Digital Currency Group’s director of investments, Rumi Morales, said the data reflects growing faith in the crypto and blockchain sector.