Crypto Companies Raised $2.6B in Q1 2023 But There’s a Catch: Report

A new report from global capital markets data platform PitchBook reveals that crypto-focused companies raised $2.6 billion across 353 investment rounds in the first quarter of 2023.

The amount raised indicated declines of 12.2% and 11% in total number of deals and value of deals on a quarterly basis, respectively. It also marks the fourth consecutive quarter of decline in investment activity, as the amount was the lowest of invested capital and completed deals since the fourth quarter of 2020.

Crypto startups raised $2.6 billion in the first quarter

Although investment activity declined for the fourth consecutive quarter, the first quarter of 2023 saw a positive outlook for the cryptocurrency space.

PitchBook coding report a statement Valuation trends were mixed, with preliminary, late and early rounds at different levels for the quarter. While early and late stage tours are up 33.3% and 209% compared to 2022, early stage tours are down 16.7%.

The $2.6 billion raised by the startups across 353 deals shows a decrease of 78% and 64.4% from last year, respectively. The report shows that while the crypto winter of 2022 continues, venture capital firms have been able to close several deals and make significant investments in the crypto space.

While PitchBook predicted that the decline would likely continue, the company reported some positive incidents in the space in the first quarter of 2023.

L2s continue to attract investment

Layer 2 (L2) expansion solutions continued its momentum from 2022 by attracting more investments. PitchBook cited Blockstream, a Bitcoin scaling platform that has raised $125 million in convertible fiat and a debt round to build bitcoin mining infrastructure. The project had previously secured a $163 million Series B funding round in August 2022.

Furthermore, PitchBook mentioned that Scroll, a company building a solution to scale the Ethereum Virtual Machine (zkEVM), has raised $50 million in a late-stage funding round.

Apart from scaling solutions, crypto custodial services have also received notable investments as the demand for self-custody has increased. Hardware wallet manufacturer Ledger has secured a $109 million Series C extension funding round to improve and expand wallet production. The French hardware company, which is behind wallets like the Nano S and Nano X, plans to make two more rounds before the end of the year.

Swiss crypto firm Taurus also raised $65 million in a Series B round led by prominent monetary institutions, including Credit Suisse and Deutsche Bank, to improve its platform and expand internationally.