Venture capital (VC) funds continue to shy away from crypto, according to new insights from Galaxy Research. With $1.98 billion invested across 376 deals, numbers like these haven’t been seen since Q4 2020—extending a trend that has been intact for the past 18 months.

For example, at the same time last year, more than $6 billion had been deployed across 600 deals, according to Galaxy Research. And last quarter, the firm also noted the precipitous drop in funding allocated to crypto and blockchain firms, which fell to $2.3 billion this year.

But there’s at least one crypto-native investor that’s not losing faith. Kavita Gupta, founder of Delta Blockchain Fund, told Decrypt the industry is very much alive and well under the surface.

“Crypto projects just aren’t announcing their rounds,” she said, explaining that this is likely fuelling the narrative that VC’s aren’t interested in crypto anymore. Gupta said that her fund closed three deals last month, and is in the midst of closing another—noting that many other firms are “actively deploying capital.”


Case in point, just last month Bitcoin bull Tim Draper announced a new crypto-focused venture studio dubbed Draper Goren Blockchain (DGB). One of the founding partners, Alon Goren, previously told Decrypt that the negative sentiment pervading the market didn’t put a dent in their conviction. He highlighted the “sheer number of entrepreneurs who are still and joining the space.”

MEXC Ventures, the investment branch of MEXC exchange, declared the firm would be making a sizable investment in Toncoin, as well, showcasing that there is still big interest in the crypto space.

Gupta also underlined the overall downturn in the market as a factor pushing down VC investments. She pointed to the digital gold rush during the previous bull cycle, which saw 1,300 deals worth $11.8 billion during last year's peak in Q2, and how nowadays “rounds just aren’t as oversubscribed as they were before.”

According to the investor, this is good, because it allows for firms to do “very deep due diligence,” due to 99% of previously oversubscribed rounds not taking place.


When asked about other industries that might have taken crypto’s place in investors' portfolios, Gupta noted that AI on-chain projects are increasingly garnering attention, although “people still wonder if that is going to work.” For her, on-chain data aggregation services that tap into AI are still “one of the most broken pieces.”

So what’s to come? Gupta emphasized that two things need to happen. The regulatory waters need to clear, and until then, founders will likely run into limits when raising more capital. The second is mainstream adoption. She pointed to JPMorgan’s decision to shut off crypto activities in their Chase U.K. institutions and how this will likely pressure other companies to follow suit.

As for the entrepreneurs looking to fund their projects, things are slightly dicey. Individuals are having to deal with “way more steps to raise money,” Gupta said, adding that for her firm, “the ideation phase is simply not enough anymore.”

“We are looking for companies that have contracts showing that their product will be used,” she concluded. “That’s pretty much the credibility requirement now.”

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