FameEX Hot Topics | US Firms Remain Top Pick as Crypto VC Funding Drops to 2-Year Low: Galaxy Research

Venture capital (VC) funding in the cryptocurrency space has hit a two-year low, according to a report from Galaxy Research, the research arm of crypto investment firm Galaxy Digital. The report revealed that in Q1 2023, VCs invested just $2.4 billion, the lowest sum since the final quarter of 2020. This figure represents a fall of over 80% compared to the same quarter the previous year, when VC investments peaked at nearly $13 billion. Although the report noted that venture deal data is often reported retrospectively, suggesting that the $2.4 billion figure may be revised in the future.

The report found that despite VC investments falling, the number of deals made had increased by nearly 20%. The report also suggested that the correlation between crypto prices and capital invested could see VC activity rebound following strong price gains late in the first quarter. Various statistics and anecdotal evidence suggest that crypto firms are leaving the US to find greener pastures, citing factors such as regulatory clarity and friendlier tax policies. However, the report revealed that US-based companies raised 42.8% of the VC money flowing into crypto in Q1 2023, with the next closest being France at 19.4%.

The report showed that while the US share of crypto VC investment has fallen by only 2.8 percentage points since Q3 2022, France appears to be the biggest winner, with capital investments for France-based crypto firms jumping to 19.4% in the latest quarter from less than 5% in Q3 2022. The report concluded that regulatory and tax environments are increasingly playing a role in the global distribution of venture investment activity in the crypto industry.

In summary, the VC investment in cryptocurrency space has hit a two-year low, with VCs investing $2.4 billion in Q1 2023. The number of deals made had increased by nearly 20%, and the report suggested that VC activity could rebound following strong price gains late in Q1. Although many statistics and anecdotal evidence indicate crypto firms are leaving the US, the report revealed that US-based companies raised 42.8% of the VC money flowing into crypto, followed by France at 19.4%. The report noted that regulatory and tax environments are increasingly affecting the global distribution of venture investment activity in the crypto industry.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.