According to CryptoPotato, recent research by crypto market intelligence firm Messari has shown that crypto fundraising in Q3 2023 declined to levels last seen in Q4 2020. The State of Crypto Fundraising report revealed that the overall funding for Q3 was under $2.1 billion across 297 deals, indicating a 36% decline in both categories from Q2 2023. The majority of the deals in Q3 were concentrated in early-stage rounds: pre-seed, seed, and series A investments, with seed funding being the largest stage, raising approximately $488 million across 98 rounds.
Early-stage deals increased to a 48% deal share in Q3 2023 from a 37% share in Q4 2020, while later-stage deals – Series B and other rounds – plunged to 1.4% from 8% within the same period. Messari noted that this development shows a strategic bear market positioning on investors' part as they try to fund projects that can return greater profits when the crypto market moves in a positive direction. Investors have shifted from later-stage projects to early-stage projects in the last three years, evident in the number of deals allocated to each stage in Q3.
Furthermore, strategic funding deals have been increasing amid the bear market, with significant funding from corporate and private equity deals. The total funding share for strategic deals rose to 22% in Q3 2023 from 0.2% in Q4 2021, suggesting that unfavorable market conditions are causing projects to raise short-term bridge rounds or get acquired by larger projects. In terms of sector funding, the chain infrastructure, gaming, and decentralized finance (DeFi) sectors emerged as the most well-funded in Q3. Chain infrastructure saw the largest share of capital at 18%, while DeFi recorded the highest number of deals, and the gaming sector received approximately $250 million in investments.
