Crypto Venture Funding Drops 63%

Venture capitalists have been under fresh scrutiny for their role hyping up the crypto industry during the criminal trial of FTX co-founder Sam Bankman-Fried, but new data shows that those investors have pulled back sharply from the industry they once helped build and promote. From a report: Global venture funding for crypto startups plunged to its lowest level since 2020 during the third quarter, tumbling 63% from the same period last year, according to data from research firm PitchBook. VCs invested just $2 billion in crypto worldwide during the quarter, a fraction of the funds they invested during happier times in the crypto world. "We aren't seeing the big deals anymore," PitchBook analyst Robert Le said. "That's one of the drivers of the decline -- deals are smaller." Mega fundraises during the crypto bull market once benefited companies like exchange FTX, nonfungible token marketplace OpenSea and NFT creator Yuga Labs. Now, the VC pullback could force difficult choices for companies already cutting costs and enacting layoffs. "If they're not able to raise a round, even a down round, they're either going to go out of business or get acquired at a valuation that's much, much lower," Le said. While crypto deals might still be happening for early-stage companies, Le said, many late-stage tech investors have exited the space completely.

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