Venture Investment Expected To ‘Reverse’ After 20% Quarterly Drop

Despite the overall decline, there were a few positive developments at the beginning of the year, Pitchbook said in a report titled Emerging Tech: Crypto Report


IgorGolovniov/Shutterstock, modified by Blockworks


It’s been a slow start to the year for crypto businesses seeking fresh capital.

Industry-related firms globally netted $2.42 billion in venture capital over 374 deals throughout Q1, 2023, marking a notable decline in value for the fourth straight quarter.

The year’s first quarterly period witnessed a 20% decrease from the previous quarter in total deal value, from $3 billion to $2.4 billion, data from Pitchbook shows. That translated into roughly 5% less in deal numbers over the same period, from 394 to 374.

Investments have continued to fall following their peak 12 months ago, thanks largely to waning interest in digital assets and a number of scandals that continued to damage crypto’s image.

As it stands, this year’s second quarter is on track to clock a fifth consecutive decline in both deal count and value, standing at 129 and $867 million, respectively. It’s worth noting that there remain roughly 49 days left in Q2, or roughly seven weeks, to break that streak.

Despite the overall decline, there were a few positive developments at the beginning of the year, Pitchbook said in its “Emerging Tech: Crypto Report,” published Thursday.

Layer-2 scaling solutions, which aim to improve the scalability of crypto like bitcoin and ether, continued to attract significant investment.

Native zkEVM Ethereum layer-2, Scroll, which processes transactions off-chain, clinched a $50 million deal on March 6 with a post-money valuation of $1.8 billion.

Bitcoin scaling platform Blockstream also managed to raise $125 million in a late-stage deal on Jan. 24, valuing the company at $2.49 billion, data shows.

That’s still a far cry from 2021 and 2022’s biggest deals, including Fireblocks’ $550 million later-stage VC in January of last year and’s $490 million deal, three months later.

“We believe late-stage valuations are being skewed upwards, as we suspect that only outsized, up-rounds are being disclosed and down-rounds are being kept private,” Pitchbook said in its report.

“Additionally, Q1 2023’s sample size is small and represents only a single quarter of data. We expect rising seed and late-stage valuations to reverse throughout the year.”

Get the day’s top crypto news and insights delivered to your email every evening. Subscribe to Blockworks’ free newsletter now.

Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from Blockworks Research’s Daily Debrief.

Can’t wait? Get our news the fastest way possible. Join us on Telegram and follow us on Google News.


upcoming event

MON - WED, MARCH 18 - 20, 2024

Digital Asset Summit (DAS) is returning March 2024. This year’s event will be held in our nation’s capital, where industry leaders, policymakers, and institutional experts will come together to discuss the latest developments and challenges in the ever-evolving world of cryptocurrency. […]

upcoming event

MON - WED, SEPT. 11 - 13, 2023

2022 was a meme.Skeptics danced, believers believed.Eventually, newcomers turned away, drained of liquidity and hope.Now, the tide is shifting and it’s time to rebuild. Permissionless II is the brainchild of Blockworks and Bankless. It’s not just a conference, but a call […]

recent research

Cosmos Hub: ATOM Economic Zone


Replicated Security, the Hub’s Validation-as-a-Service offering that went live in March, is the first step in bringing value accrual to ATOM stakers.



Kenya’s central bank doesn’t seem enamored by the idea of a CBDC but hasn’t slammed the door shut yet


Both Ethereum and Solana have enjoyed vibrant DeFi environments, but this has not yet been the case for Cosmos


As Japan takes important step forward on stablecoins, industry participants say, proposed US laws around such crypto assets remain in flux


Stablecoins offer global financial access and on-chain transactions without limitations, while FedNow falls short in terms of utility, global reach and inclusivity


Connext wants to make using layer-2s and layer-3s a seamless experience


GameStop has been dabbling in Web3 initiatives since at least January 2022