13 Jun 2022

Private capital is drying up in the crypto industry

We have seen a substantial decrease in the capital invested in private crypto companies in 2022.
Source: Architect Partners
At the start of 2022, when private capital markets were still on fire, crypto companies raised around $1 billion or more weekly. This number has decreased as the average size of each raise is much smaller.We still see many funding rounds, but companies generally raise less money since the valuations of private crypto companies have plummeted.BlockFi’s rumored funding round is an example of the falling valuations of private crypto companies. The crypto lending platform is supposedly raising at a $1 billion valuation, down from $3 billion at their latest funding round in March 2021.Crypto stocks have also performed poorly recently, exemplified by Coinbase, which is down 83% from the listing date in April 2021.Still, we see that venture capital firms still have dry powder to deploy, as a16z raised $4.5 billion for its fourth crypto fund in April.The worsening crypto financing conditions result both from a general capital dry-up in the financial markets and investors specifically losing interest in the crypto sector as the crypto market bleeds.
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