A slow year for crypto M&A, fundraising got even slower in Q3

Crypto has had a sluggish year in terms of acquisitions and fundraises. This trend continued into the third quarter when two significant deals, anticipated to enhance the overall value, failed to close.

The deal count of mergers and acquisitions, or M&A, involving crypto companies fell from 32 in the second quarter to 26 in the third quarter — a 19% drop, according to a report by advisory firm Architect Partners.

The year-over-year plunge was greater, as the number of transactions fell by 48% from 50 deals in the third quarter of 2022.

The 26 deals from July to September brings the year-to-date total to 112 — well behind the pace of 144 deals in the first three quarters of 2022.

Q3 Crypto M&A Chart

“Collectively, there is a sentiment that we need to see increased real-world adoption, more regulatory certainty particularly in the USA, greater institutional investment leading to higher prices [and] greater M&A currency, and new digital asset developments to see growth,” Architect Partners’ Elliot Chun said in a statement.

Potential “promising activity” in the fourth quarter is likely to be “muted over previous euphoric days,” the firm partner added.

In addition to a decline in the count of crypto M&A deals, the reported transaction values have also diminished. The total disclosed consideration for third-quarter deals was $59 million, marking the lowest sum since the fourth quarter of 2020, according to Architect Partners.

That value would have seen a boost if two major deals hadn’t been canceled, the advisory firm notes.

Crypto custodian BitGo in June ditched its tentative agreement to buy Prime Trust “after considerable effort and work to find a path forward” with the company.

More recently, Ripple terminated its planned acquisition of Fortress Trust, Ripple CEO Brad Garlinghouse said in an X post last week.

As for crypto private financings, deal count dropped 6% quarter over quarter — from 306 to 288, the Architect data shows. The value of those money raises fell from nearly $2.4 billion to about $1.7 billion in that span.

Late-stage financing amounts were down 59% — a drop larger than the decreases in seed and early-stage financings, at 11% at 15%, respectively.

So far in 2023, the count for crypto financing deals stands at 912, a decline of 37% compared to the same period last year. The capital raised year to date is roughly $7 billion — about 73% less than the $26 billion raised through three quarters in 2022.

While the number of financings in the crypto space were down 6% quarter over quarter, deal counts in the tech and financial services sectors surged by 65% and 52%, respectively, during that same timeframe.

Get the news in your inbox. Explore Blockworks newsletters:

The Breakdown: Decoding crypto and the markets. Daily.
Empire: Crypto news and analysis to start your day.
Forward Guidance: The intersection of crypto, macro and policy.
0xResearch: Alpha directly in your inbox.
Lightspeed: All things Solana.
The Drop: Apps, games, memes and more.
Supply Shock: Bitcoin, bitcoin, bitcoin.