Crypto Venture Funding Hits Year-Low in Q3 2022: Galaxy

Venture capitalists have together raised $121 billion this year, but only $32 billion has been deployed so far

article-image

Blockworks exclusive art by axel rangel

share

key takeaways

  • Venture funds in the crypto space have the money, but they are slow to deploy it
  • Venture capital investors put more than $5.5 billion into crypto startups last quarter, compared with $8 billion in Q2

2022 has already been a record year for venture capital funding in the crypto space, but a decline in the second half may foreshadow a prolonged slowdown, according to new research from investment firm Galaxy Digital. 

There have been 415 venture funds launched so far this year, with a collective $121 billion raised, but only $32 billion in venture capital has been deployed since the start of the year. 

“Due to tumultuous crypto market conditions in May and June, funds are likely pushing their fall fundraising to Q4 to allow markets to recalibrate,” Galaxy researchers noted in their third quarter venture funding update, released Friday. 

Fewer crypto venture funds have been launched this year than in 2021, according to a second quarter 2022 report. Last year, 999 venture funds launched, compared with 415 in 2022 as of June 30.

In the third quarter of 2022, venture capital investors put more than $5.5 billion into crypto startups, compared with $8 billion in the second quarter, according to Galaxy. The third quarter of 2022 saw an 80% drop in venture capital raised. 

The second quarter of 2022 marked the beginning of the decline in venture interest in the crypto space, Galaxy’s venture funding Q2 report noted. The period saw less than half of the pre-seed deals closed during the first quarter, according to the report, and the trend has only continued over the last quarter. 

Plenty of dry powder for crypto venture capitalists

Due to continued volatility in the space, capital deployment has been slow. BlockTower Capital, for instance, has put $20 million of its newly launched $150 million fund to use.

As of mid-October, crypto-focused New Form Capital has only allocated around 30% of its $75 million Fund 2, according to TechCrunch.

There is a lag for venture funds reporting net asset values, though, Galaxy noted, and bearish market conditions are having a greater impact on allocation decisions. 

“In a more stable market, the lag does not impede the allocator’s ongoing investment, but in a highly volatile market, the lag can cause problems,” Galaxy wrote.

This has to do with allocator’s investments in liquid assets, such as stocks and fixed-income products, that have dropped over the past six months, so they have to re-balance. 

“Because their liquid portfolios have declined, but they haven’t yet received Q3 fund reporting from their venture investments, allocators currently do not have an accurate view of their portfolio balances, potentially making new investments in crypto VC problematic at the moment,” the report added. 


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates.png

Research

Content Delivery Networks (CDNs) represent low-hanging fruit in a massive market ripe for Web3-driven disruption. The global CDN market was valued at ~$28B in 2024, and is projected to surpass $140B by 2034, (18.75% CAGR) underscoring the immense demand for efficient content delivery.

article-image

The next step in Blockworks’ evolution into a data powerhouse increases customizability and autonomy over their high quality charts and data

by Westie /
article-image

Sponsored

With early interest from an initial cohort of brands including Metaplex, Story Protocol, and Pipe Network, Shelby offers decentralized, cloud-speed storage for streaming, AI, and real-time content

article-image

The $135 million raise shows that TradFi giants are serious about crypto adoption

article-image

The banking system still processes payments like it’s 1975. Crypto might have a fix.

article-image

Fiserv’s launch follows Senate passage of the GENIUS Act for stablecoin regulation.

article-image

Bitcoin is emerging as “the new standard for long-term corporate resilience,” Swan Bitcoin CIO says