In 2023, the crypto space has experienced a stark contrast to the booming venture capital (VC) funding it witnessed in 2022.
Last year, the first and second quarters together witnessed an influx of a substantial $20.3 billion in VC funding. However, this year has been notably deficient in comparison.
VC funding in the crypto sector has noticeably dwindled throughout 2023. In the initial quarter, approximately $2.6 billion worth of crypto VC deals transpired.
The second quarter fared even worse, with approximately $2.1 billion distributed across 292 funding rounds, marking one of the weakest performances in the realm of crypto fundraising.
Amidst this VC funding slump, Tony Cheng, a partner at the crypto investment firm Foresight Ventures, shared insights during an interview with Cointelegraph’s Zhiyuan Sun.
Cheng discussed the factors contributing to the decreased interest from venture capital firms, strategies for founders to weather the bear market, and the ongoing debate between user growth and profitability for crypto companies.
Cheng noted that many of the prevailing narratives in the crypto space, such as layer-2 solutions, zero-knowledge proofs, and nonfungible tokens (NFTs), have plateaued.
READ MORE: Coinbase CEO Foresees Crypto’s Major Role in 2024 Elections, Urges Clearer Regulations
These once-prominent trends have seen reduced trading volumes on exchanges and in decentralized finance (DeFi), leading Cheng to remark that they have “kind of died down.”
He identified the lack of new innovations as a major hindrance to confidence and investment in the crypto sector.
While acknowledging the limited market activity and user base, Cheng remained cautiously optimistic, anticipating a potential turnaround with improved market conditions and increased enthusiasm for the next crypto cycle.
In response to whether founders should accept less favorable funding terms, Cheng emphasized the paramount importance of survival.
He urged struggling projects to secure capital to ensure their viability in the coming months, as future funding availability remains uncertain.
Cheng stressed that, given the prevailing bear market conditions, pursuing a “growth at all costs” strategy may no longer be viable. Instead, he advised crypto companies to prioritize profitability and financial stability.
In times of economic downturn, survival takes precedence above all else, safeguarding the progress achieved in the crypto space over recent years.
Other Stories:
Vitalik Buterin’s X Account Breached: Over $691K Lost to Malicious NFT Link
Rise of Senior Executives Leading Digital Asset Strategies Signals Investment Firm Transformation
Terra Classic Community Proposes Minimum Deposit Hike to Combat Spam
