Capital inflows from venture capitalists fell 10.26% in July, raising $700 million, according to data from the Cointelegraph Research Venture Capital Database. The past two months have rejected a potential uptrend as macroeconomic conditions surrounding Fed rate hikes and geopolitical events still appear to be weighing more heavily on venture capital decisions.
With this in mind, many companies hedge most of their reserves, while some invest some of their capital in value investments. Generally, venture capitalists scrutinize each new project for potential investment opportunities, preferring to follow smart money rather than venture in the dark.
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However, not everything is so grim in the world of cryptocurrency venture capital. Polychain Capital launched a $200 million investment fund IV in July, and CoinFund launched a $152 million seed fund IV in July. In the present context, they can be considered noteworthy outliers. In contrast, only three cryptocurrency funds emerged in June, raising a combined total of less than $100 million.
Hype is also growing over the possible approval of a U.S. spot bitcoin (BTC) exchange-traded fund (ETF), which could reinvigorate the industry and fuel the next cryptocurrency bull run if it can win SEC approval. The approval could send an encouraging signal to cryptocurrency venture capital and bring more attention and capital to the industry. However, we have yet to see if this will reverse the investment trend.
Infrastructure and Web3 stay ahead
Web3 has been one of the most active sectors in terms of deal count, and July was no exception, with 26 deals raising $256.2 million. Conversely, the infrastructure sector has recently attracted the most capital inflows and will continue this trend, attracting $279 million in 24 deals in July. Decentralized finance followed with $140.1 million invested in 19 deals, while centralized finance and non-fungible tokens (NFTs) dropped out of the list again.
Polygon and Binance Labs competed in four rounds in July. Interestingly, 0xBoost Finance, Aethir, Dappos, and Delabs Games have attracted investment from several well-known investment companies, including Polygon, Binance Labs, HashKey Capital, etc.
However, none of these projects have raised the most money. Web3 startup Zyber 365 tops the list with Series A funding round $100 million. The round makes Zyber another fintech unicorn valued at more than $1.2 billion, and the funds are aimed at fueling global expansion.
Infrastructure solutions provider Flashbots is primarily focused on reducing the negative impact of maximum extractable value on the Ethereum blockchain, successfully closure $60 million in Series B funding from Sanctor Capital, HashKey, Animoca, and others.Meanwhile, Futureverse, an artificial intelligence (AI) metaverse startup, successfully shut down an $54 million in Series A financing From 10T Holdings and Ripple. Futureverse is a portfolio of 11 startups from various fields including blockchain, artificial intelligence, NFT, and gaming, aiming to expand the ecosystem of companies.
That upward trend did not continue in July, leading to another month of declines in investment. Investor activity is low, and the blockchain industry is unlikely to return to a steady upward trend anytime soon, although positive sentiment over the approval of bitcoin and ethereum (ETH) ETFs in Europe and the US could change the venture capital landscape.
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