Crypto investments at a low: the number of active venture capital funds has plummeted to 2020 levels
The venture capital financing market for the crypto industry is experiencing a dramatic contraction. According to my calculations based on data from the analytical platform CryptoRank, only 150 venture capital funds have participated in funding rounds for crypto projects since the beginning of July. This is the lowest monthly figure since November 2020 — that is, in nearly the last four years.
This trend is not a coincidence but a natural outcome of the current market conditions. We are witnessing a clear concentration of capital: an ever smaller group of organizations is distributing funds, and investors have tightened their selection criteria to the limit. If during the bull market of 2021 funds were willing to invest in projects with minimal due diligence, now every decision undergoes multi-level scrutiny.
It is particularly telling that the decline in activity is occurring against a backdrop of overall cooling interest in high-risk assets. Many funds are revising their strategies, focusing on mature projects with real products and revenue rather than early-stage ventures with promises. This is also confirmed by the dynamics of the average check size: it is growing, but the number of deals is shrinking.
My analysis: The current situation resembles a market "purge," which is inevitable after any hype cycle. For the industry, this is even positive — only those capable of surviving in tough conditions remain. However, investors should be prepared for the fact that the recovery of venture capital fund activity may take another 6–12 months if the macroeconomic situation does not improve.