BlocksInform
CoinDesk Staff
Venture capital investments in blockchain startups soared to a record $25.2 billion in 2021, driven by bullish optimism and financing surges for non-fungible tokens (NFTs) and decentralized finance (DeFi) projects. In 2022, funding slowed dramatically and is projected to be about one-third of 2021’s record, following a wave of fallen companies, including hedge fund Three Arrows CapitalCelsius and exchange giant .
In 2022, funding has slowed considerably and is expected to account for about a third of the record in 2021, following a wave of companies that have collapsed, including the Three Arrows CapitalCelsius hedge fund and the trading giant.
In 2022, Funding has experienced a dramatic slowdown and is expected to be about a third of the 2021 record, as a result of the decline of enterprises, including hedge funds three capital arrows celsius and foreign currency giant . david pakman, Associate Manager and Chief Venture Capital Officer for a cryptocurrency-focused venture capital fund, discussed the investment environment in 2023, and which crypto verticals might emerge more strongly in the post-ftx world in an interview with coindesk. Cryptography experienced a lot of self-injury in 2022 and it's fueling the discourse we're already fighting: Oh, scammy people doing scammy things. This is just another example," pakman said, noting that ftx fell as a result of human behaviour, not a failed technology."
2023 investment landscape
"Capital landscape in 2023. '2023 landscape investment fund was an early ftx investor and had a small amount of shares, which has now been written at zero, said pakman. The company did not hold FTT chips but had what he thought was a "very small business" going on when the swap collapsed.
CoinFund announced a $300 million Web3-focused fund in August, and regulatory filings last month revealed plans to raise $250 million for a seed investments fund, indicating the firm has continued to raise money despite the macro environment.
Coinfund announced a website-based fund of $300 million in August, and last month's regulatory filings revealed plans to raise $250M for a seed fund, stating that the company continued to raise funds in spite of the macroeconomic environment. Pakman spoke about the own fundraising efforts of CoinFund.
Bear markets can benefit venture capital firms because shakier markets lead to lower valuations and more attractive entry points for potential investors
2023 predictions
Bear markets can be advantageous for venture capitalists, as more volatile markets result in lower valuations and more attractive entry points for projections of potential investors for 2023. The collapse of a centralized exchange has also put more focus on decentralized finance (DeFi).
"The FTX and Celsius stuff – and all the other failures – might be creating renewed interest in productizing DeFi in a way that’s easier to access by both institutions and individuals. The collapse of a centralised stock exchange has also placed greater emphasis on decentralised finance (challenge) – and every other chess – This may lead to a renewed interest in the production of challenges in a way that is easier for institutions and individuals to access.
Post-FTX path forward
“How do we get out of this loop of bad events happen – largely because of a human-led CeFi mistake – that exposes all sorts of other risky behaviors that lead to this domino effect of more companies failing?” asked Pakman. How to exit this loop from bad events happens – for the most part due to a human error of the CeFi – which exposes all kinds of other risky behavior that lead to this domino effect of the failure of more businesses" asked Pakman.
"We don't want many businesses to fail."
'we don't want to see too many companies fail.' Companies should focus on managing risk and prudently using leverage, he said, although startups should try to avoid leveraging. 'Startups are one of the riskiest things you can do.
It hardly ever works, according to pakman. When we succeed, you don’t want to then bring in a bunch of extra risk by using leverage or doing other stupid things because it’s hard enough to get to a success scenario,” Pakman said.
Read more: 10 Predictions for the Future of Crypto in 2023
