Funding To Crypto Startups Plummets To Lowest Level Since Late 2020

This is a weekly feature that will look back at the week that was in crypto, blockchain and Web3, and offer insights and analysis. Check out our previous column here.

Crypto funding sank to its lowest level since November 2020 last month as the industry was left reeling by an FTX-induced contagion.

VC-backed crypto startups raised only $394 million total in November, according to Crunchbase data. That is the lowest total since November 2020, when crypto startups raised less than $200 million.

Funding had been down this year compared to 2021 — which is true of almost every industry — but seemingly had bounced back some after a dip in July.

That was the same month embattled lenders Celsius Network and Voyager Digital filed for bankruptcy. In July funding in crypto fell to $402 million from $1.5 billion just the month before.

FTX’s impact

It is impossible to blame the drop in funding just on FTX’s fall — or possibly even any of it. Funding rounds typically close weeks — sometimes months — before they are announced, meaning most deals announced last month were closed before news of FTX’s collapse in early November.

Also, funding in November was down nearly everywhere, so it should come as no surprise crypto followed that trend.

Nevertheless, the numbers could be a troubling harbinger for an industry still struggling with the dramatic implosion of what was the fourth-largest crypto exchange and many of its affiliates. There are still significant questions about what the future will hold, not just for those companies but also the hundreds of investments and bets Sam Bankman-Fried placed on other companies in the greater crypto ecosystem.

The market also has even already seen companies without direct ties to Bankman-Fried negatively affected because of the contagion that has swept the industry.

Few are predicting venture funding will see a significant uptick in the coming six months — that likely is especially true for crypto startups.

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Illustration: Dom Guzman