The cryptocurrency and DeFi sectors have experienced a marked decline in venture capital funding during the third quarter of 2023. According to data from DeFiLlama, venture funding for crypto projects fell by 33% between the second and third quarters of this year. This downturn in funding has been described as the most significant since 2020.
Between July and September, the crypto industry managed to raise approximately $1 billion across 144 deals. This figure is notably lower than the funding received in previous quarters. In the first quarter of 2023, 228 projects collectively amassed $2 billion, while the second quarter saw 171 blockchain ventures secure $1.5 billion.
A month-by-month breakdown of the third quarter reveals that the industry raised $460 million in July, $283 million in August, and $352 million in September. The September figure represents a staggering 77% year-to-year drop from the same month in 2022 when the industry garnered $1.5 billion.
This decline in funding is reminiscent of the third quarter of 2020, during which the industry raised just over $924 million, as per DeFiLlama’s data. The reasons behind this significant drop in funding remain speculative, but the data underscores the volatility and unpredictability of the crypto venture capital landscape.
Despite the overall decline, some companies managed to secure substantial funding during this period. Crypto custodian BitGo stood out with the quarter’s most significant deal, raising $100 million in a Series C round at a valuation of $1.75 billion. Other noteworthy deals included Flashbots’ Series B round, which brought in $60 million, and Futureverse’s Series A round, which secured $54 million. Both of these deals took place in July.
While the third quarter of 2023 has been challenging for many in the crypto space, it remains to be seen how the industry will fare in the coming months.