Encryption and blockchain Startups haven’t had a good time raising money in a long time, given the overall slowdown in funding, a strong focus on due diligence, and concerns about the macroeconomic environment and regulations in the US.
At first glance, August seemed to bring some relief for startups in the space, with venture capitalists investing $819 million in 91 companies, according to new data from PitchBook. That represents about 51% more than the $542.8 million raised by companies in this space in July.
However, August is only looking good because of the massive $400 million round raised by the “Shariah-compliant” digital asset exchange. Haqxand a $100 million round raised by cryptocurrency custodian BitGo. Without these two rounds, we would have actually seen a decline in investment last month compared to July.
Things look a little worse when comparing last month’s totals to the same time last year, when $1.74 billion was raised, a 53% decline, the data showed.
This isn’t a new trend either. Venture capital investors haven’t been excited about the digital asset industry since roughly the first quarter of 2022 — and by the second quarter, investments in the space had declined for five straight quarters.
However, August’s good numbers may not be able to stop the bleeding. So far, web3 startups have raised $1.38 billion in Q3, which means that for funding in this space to exceed Q2 levels, startups will need to raise an additional $960 million in September. Looking at how things have been over the past couple of months, this seems highly unlikely.