Crypto Firms Raise $21.26 Billion in 2022 Despite Funding Decline
• Cryptocurrency projects received 42.5% less funding in 2022 than they did in 2021, raising $21.26 billion in total.
• This is significantly higher than 2018, 2019, and 2020, when crypto firms raised funds worth $16.22 billion, $4.48 billion, and $4.40 billion respectively.
• Andreessen Horowitz, also known as a16z, secured one of the largest crypto financings in 2022, raising $4.5 billion.
Cryptocurrency projects experienced a significant decline in funding in 2022 compared to the previous year. According to a CoinGecko report on 6 January, projects received 42.5% less crypto funding in 2022 than they did in 2021. Crypto firms raised funds worth $21.26 billion last year, nearly half of which was secured during the first quarter before the start of the crypto winter.
Although this amount is significantly lower than the $37 billion raised in 2021, it is still higher than the funding received in 2018 ($16.22 billion), 2019 ($4.48 billion), and 2020 ($4.40 billion). This points towards the growth of the cryptocurrency industry over the last five years, as more projects are receiving financial backing from institutional investors.
The highest amount of funding in a single quarter was $8.19 billion in 2018 Q2. However, several cryptocurrency projects collapsed by the middle of 2022, such as the stablecoin Terra LUNA [LUNC], Three Arrows Capital (3AC), Celsius Network, and FTX. This led to the total capital raised in the third quarter of the year to be only $3.61 billion. In the fourth quarter, the crypto firms only raised funds worth around $3 billion, which is the same period when FTX collapsed.
In May, Andreessen Horowitz, also known as a16z, secured one of the largest crypto financings in 2022, raising $4.5 billion. Katie Haun, a former a16z general partner, said that the firm’s investment was “a testament to the increasing maturity of the crypto ecosystem.” She also added that the funds will be used to “support entrepreneurs and developers building the protocols, applications, and infrastructure that will form the foundation of the future of the internet and other digital markets.”
Overall, the decline in funding for cryptocurrency projects in 2022 is a sign of the current market conditions and the fact that investors are becoming more selective about which projects they are investing in. Despite the decline, the amount raised in the year is still higher than the amounts raised in the previous three years, which is a positive sign for the future of the cryptocurrency industry.