Cryptocurrency Fundraising Declined Sharply While DeFi Lending Attracts VC Backing
In recent times, venture capital research company Ana.vc published a report highlighting a 57 percent reduction in cryptocurrency funding from VCs last month. In spite of the dip in overall investment, it seems the decentralized lending sector is still prosperous as it raised 150 percent of its aggregate in March.
The report noted a decline in cryptocurrency fundraising last month but did not consider Bakkt’s raise. It noted thirty disclosed deals worth an aggregate of about $50 million, down from $117 million last month.
“The median round in Fintech / DeFi was $5m with seed ranging between $150k and $1.8m. The quality is still a concern amongst the investor circles. The good news is that it has been improving in the past year and we will get to a point where a large pool of well operated high growth businesses will become a thing in web3.”
Another observation is the continuous domination of the entire funding by decentralized finance (DeFi) and fintech, as they garnered about 40 percent of the monthly aggregate raised by the cryptocurrency sector for the second concurrent month.
Companies developing blockchain infrastructure made up the second-largest part of the cryptocurrency sector as they raised 12.9 percent. Enterprise and marketplace occupied third and fourth place with 9.7 percent and 6.5 percent, respectively.
The report also noted an increase in investment activity around DeFi lending, as DeFi lending startups raised $4.84 million last month which represents a 56 percent from $3.1 million in March. Despite this, there was about 60 percent fall in the gain from equity deals across the DeFi sector, as the payment companies incurred the biggest decline (82.6 percent) from $9.24 million in March to $1.61 million.
The biggest decline in aggregated fundraising was incurred by exchanges, while almost 50 percent of the fundraising occurred in the U.S., with more than 80 percent of deals closing in the U.S., U.K., and Europe. In spite of the remarkable hype about gaming platforms based on blockchain, it was noted that none of them closed funding deals last month.