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Crypto's VC immunity wanes

Lucinda Shen
Jul 19, 2022
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Illustration: Aïda Amer/Axios

Crypto and blockchain-related companies raised about $6.8 billion in private funding during the second quarter of the year, data from FT Partners shows — a 23.6% decline from the quarter prior.

Why it matters: Crypto companies had been an exception to the broader venture capital slowdown, raising a record amount of funding in the first quarter. Not so much in Q2.

Context: It was in the second quarter that the so-called stablecoin Terra (UST) collapsed, creating a cascade of problems for the rest of the industry. In part due to its exposure to the asset, crypto hedge fund Three Arrows Capital plunged into liquidation not long after.

  • Crypto lenders like Celsius, BlockFi, and Voyager all scrambled to arrest the contagion that had hit their businesses. But Voyager and Celsius had to file for bankruptcy.

The venture market tends to lag a few quarters behind the more liquid public markets, so it wouldn't be surprising to see an even more dramatic drop in funding for the third quarter of the year.

One bright side: Crypto funding remains above pre-pandemic levels, meaning the space is far from dead.

Bottom line: It's certainly going to get harder to get funding for a business in the space than it was a few months ago.

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