The bearish phase that reigned in the cryptocurrency market for almost the entire 2023 was also reflected in the investment landscape of the industry. According to expert observations, over the past year, blockchain projects and startups have received 68% less investment compared to the previous year..
After the collapse of the FTX exchange, many funds, even those focused on the Web3 segment, “slowed down new transactions,” noted New Form Capital founder Alex Marinier.
However, despite market conditions, fundraising in the industry has not stopped. According to Incrypted estimates, in 2023, 1,330 Web3 and blockchain projects attracted funding totaling about $10.08 billion.
Infographic Incrypted.The projects attracted the largest amount of investment in the first quarter ($3.17 billion), the smallest in the third quarter ($1.97 billion).
I quarter ($3.17 billion):
- January: 134 projects attracted $885.3 million in investments. The leader in the amount of funding received was Blockstream – $125 million.
- February: 139 projects received funding totaling $1.052 billion. The Israeli startup Chain Reaction, which produces blockchain chips, managed to attract the most funds – $70 million.
- March: 113 projects attracted $1.23 billion in investments. Leader of the month – trading platform eToro received $250 million in funding.
It should be noted that in March, the payment provider Stripe signed an agreement to attract additional investments in the amount of $6.5 billion, and the company’s valuation then was $50 billion.
Q2 ($2.75 billion):
- April: 129 projects attracted $1.038 billion in investments. LayerZero Labs raised the most funds – $120 million. Participating in the Series B funding round were a16z, Sequoia Capital, Circle Ventures, Samsung Next, OpenSea, Christie’s and others.
- May: 132 projects received $1.077 billion in a month. The leader in the amount of capital received was the Worldcoin project, which completed a Series C funding round of $115 million led by Blockchain Capital.
- June: 102 projects attracted $634.2 million in investments. The British startup Gensyn received the most funding – $43 million.
III quarter ($1.97 billion):
- July: 96 projects received $825 million in investments. The leader in the amount of funding received was the infrastructure provider for Ethereum – Flashbots – $60 million.
- August: 85 projects raised $469.7 million. The leader in terms of the amount of funding raised was the cryptocurrency custodial service BitGo, which received $100 million.
- September: Based on the results of September, 91 projects in the field of Web3 and blockchain attracted funding totaling $679.1 million. The largest amount of investment was received by the mining company Core Scientific – $53 million.
IV quarter ($2.18 billion):
- October: 101 projects attracted funding totaling approximately $441.7 million. The identity verification startup Prove Identity received the most funds – $40 million. After completing the funding round, the startup’s valuation increased to $1 billion.
- November: 98 projects raised funding totaling $954.8 million. The Wormhole cross-chain bridge received the most funds – $225 million. After the completion of the investment round, the project’s valuation increased to $2.5 billion.
- December: 102 projects received investments totaling about $790 million. The leader in terms of the amount of funding raised was LINE NEXT Corporation, in which the investment company Crescendo Equity Partners invested $140 million.
Infographic Incrypted.Investors and segments
According to CryptoRank, the most active investor in 2023 was Coinbase Ventures, which invested in 43 projects. The majority of funding rounds came from startups in the DeFi and blockchain service development sectors—17 and 12, respectively.. The fund also invested in companies from such areas as CeFi, NFT, Chain, Blockhain Infrastructure, GameFi and Social.
Infographic Incrypted.Investors’ focus in 2023 was on the development of blockchain services and blockchain infrastructure, DeFi, CeFi, NFT, Web3, GameFi and others.
Infographic Incrypted.Artificial intelligence
It should be noted that in 2023, startups in the field of artificial intelligence (AI) received significant investments.. According to Dealroom, AI-focused projects raised $58.3 billion over the year, which is five times less than last year..
Top 8 AI startups by funding received in 2023, according to Crunchbase:
Infographic Incrypted.- $10 billion – OpenAI. At the beginning of the year, Microsoft announced plans to invest in OpenAI. The company will reportedly receive 75% of OpenAI’s profits until it makes a return on its investment, at which point it will own a 49% stake.
- $6.85 billion – Anthropic. In September, Amazon announced it would invest between $1.25 billion and $4 billion in the company.. A month later, Google announced plans to invest $2 billion in the startup..
In August, Anthropic raised $100 million in investment from South Korean telecommunications company SK Telecom.
Additionally, in March the company raised $300 million from Spark Capital, and in May the startup raised another $450 million from the same investor, as well as Google, Salesforce, Zoom Ventures, Sound Ventures and Menlo Ventures
- $1.7 billion – Metropolis. Platform that aims to create an AI-powered solution for car parking has attracted investment. The funding round was co-led by Eldridge Capital and 3L Capital, with participation from BDT and MSD Partners, Vista Credit Partners, Temasek, Slow Ventures and Assembly Ventures.
- $1.3 billion – Inflection AI. The project, which aims to create “personal AI for everyone,” has received funding from Microsoft, Nvidia and private investors including Reed Hoffman, Bill Gates, and Eric Schmidt.
- $500 million – Databricks. Data analytics software maker receives Series I funding. The investors were T. Rowe Price, Morgan Stanley, Fidelity, Franklin Templeton, Capital One Ventures, Nvidia, Andreessen Horowitz, Tiger Global и другие.
- $500 male — Aleph Alpha. The German company received investments to accelerate the development of generative artificial intelligence. Funding for the startup was provided by Innovation Park Artificial Intelligence, Bosch Ventures, SAP, Cavalry Ventures, LEA Partners and 468 Capital.
- $500 million – Sandbox AQ. Alphabet Inc subsidiary raises funding ‘to help customers prepare for the future of quantum computing’. Breyer Capital, T funds took part in the investment round. Rowe Price and TIME Ventures, as well as former Google LLC executive and current head of Sandbox AQ Eric Schmidt.
- $415 million – Mistral AI. The French startup closed a funding round, which included such counterparties as Andreessen Horowitz, LightSpeed Ventures, Salesforce, BNP Paribas, General Catalyst, La Famiglia, New Wave, Motier Ventures and Sofina.
It should be noted that earlier Goldman Sachs analysts Joseph Briggs and Devesh Kodnani predicted that investments in AI by 2025 could amount to about $100 billion in the US and $200 billion worldwide.
They also stated that in the long term, AI-related funding could peak at 2.5-4% of GDP in the US.
In addition, experts expect that investments in AI will be concentrated in four key business segments:
- companies that train and develop artificial intelligence models;
- firms providing infrastructure to run AI applications;
- startups developing software to run AI-enabled applications
- enterprise end users who pay for that software and cloud infrastructure services.
Countries
It should be noted that in 2023, the most investments were attracted by projects located in the United States – $3.2 billion. The UK is second in terms of the amount of funding received – $905 million, the third is Germany ($675 million). Another $2.7 billion in investments was received by startups whose jurisdiction was not disclosed.
Infographic Incrypted.Conclusion
Despite the difficult conditions on the cryptocurrency market in 2023, industry projects continued to attract funds for further development. Follow the Incrypted team to see how the investment climate will change next year.