Funding for blockchain projects by venture capitalists fell 22% in Q2 2022.
Venture capital inflows into the blockchain sector fell from $12.5 billion to $9.8 billion in Q2 this year, analysts at The Block Research report. The decline in venture investing marks the first time since Q4 2020, when blockchain funding by business angels steadily increased over the next seven quarters, surging nearly 2,000% during that time.
The number of investment deals in the last quarter increased slightly from the previous period, from 648 to 694. But specifically in June, compared to May, the number of such deals fell from 247 to 196, that is, by more than 20%. Moreover, the share of deals worth less than $50 million grew in Q2, with 44% compared to 29% in Q1.
Analysts say the sector financing trends are beginning to reflect the overall decline in the cryptocurrency market. Typically, the decrease in venture capital investment is a lagging indicator of the sector’s state, as it can take a significant amount of time between the announcement of deals and their closing. According to the report, funding growth has been seen solely in the sector of companies specializing in data processing and analytics.
Venture funding in general is likely to continue to decline under the influence of macroeconomic factors. However, large public funds such as Qatar Investment Authority (QIA) are expressing interest in the blockchain sector.
