Venture capital financing for crypto startups has to come back in accordance with the recent legal clarity in the US, despite the sign of signs of recovery in the months after President Donald Trump’s elections.
According to analysts, the Excessive inflow of capital in 2021 and 2022 did not lead to a proportional return for investors, which has damaged confidence and reduced the influx of VC money.
Underwhelming performance
MV Global Partner Tom Dunleavy said That the crypto industry has submitted excessive capital with regard to the number of high-quality projects.
He noted that venture companies optimized for token in the short term instead of promoting long-term companies in an emerging sector.
Dunleavy Added:
“We should see the 21/22 type that rises today, because the industry now has a very clear long -term process, but daily marking for market price promotion has destroyed sentiment.”
The average monthly VC financing for crypto startups was $ 3 billion in 2021, but the following year moved almost 50% to $ 1.88 billion. The trend has continued with 2024 only $ 801 million.
In December 2024 in particular, the amount that VCs invested in Crypto companies surpassed $ 1 billion for the first time since April of the same year.
The threshold has since been consistently surpassed, with $ 1.2 billion in January and $ 1 billion last month. However, the growth remains modest, given the improving regulatory environment in the US.
Failed projects and skepticism of investors
Mickey Hardy, chairman of Arcadia, reflect The assessment of Dunleavy, which emphasizes that many projects that are financed during peak years are no longer operational or have been abruptly stopped with the activity.
This has led to an increased caution among investors, because mistakes from the past have reinforced skepticism with regard to the viability of new crypto startups.
Hardy said, however, that he believes that risk capital activity will resume as soon as the market stabilizes, so that the reinforced position of Bitcoin (BTC) is noticed as a recognized active.
Dunleavy also acknowledged that financing could return, but with a considerable delay. Although regulatory improvements offer a structured environment for crypto companies, investor sentiment remains modest due to previous losses and a shift in risky appetite.
State in this article
