Crypto Saw 20% More VC Deals In First Quarter: Galaxy

Pre-seed VC deals proved popular across the crypto startup landscape last quarter, although total funding dropped slightly

article-image

ImageFlow/Shutterstock, modified by Blockworks

share

Crypto had a messy 2022. But if the venture capital (VC) scene is anything to go by, things may be looking up.

Crypto deal activity improved last quarter, per Galaxy Digital, with 439 deals compared to just 366 in the fourth quarter of 2022. The 20% jump was largely driven by pre-seed deal activity, which more than doubled from the previous period.

But a higher number of deals didn’t convert to more capital. The crypto and blockchain sectors saw lower venture capital funding in the first quarter, altogether hitting $2.4 billion — the lowest amount since Q4 2020.

“In Q1 2023, crypto and blockchain startups raised less than half the amount raised just two quarters ago,” Alex Thorn, head of firmware research at Galaxy, wrote in the report.

Companies involved in Web3, NFTs, DAOs, metaverse and the gaming subsector scored the most deals. Meanwhile, companies tied to trading, exchange, investing and lending raised the majority of venture funding ($538 million). 

Wallet-based startups were a close second at $519 million. 

Crypto venture funding fell four quarters in a row (image source: Galaxy Research)

Capital raises were dominated by US-based companies, followed by France. And it was mostly younger companies, established in 2021 and 2022, that raised venture deals.

Thorn wrote that if VC activity continues at this rate, 2023 would be a hot year for the industry.

“Despite significant drawdowns from the all-time highs in venture activity seen in 2021 and 2022, crypto VC activity remains elevated when looking back to the crippling previous crypto winter, even despite the rising rate environment stifling allocator interest,” he said. 

“If the current pace holds exactly, albeit an unlikely scenario, 2023 will see more money invested than 2018, the biggest year for crypto VC prior to the last bull market.”

Mirva Anttila, director of digital assets research at WisdomTree, agreed that the crypto industry currently faces a positive trajectory.

“We believe we could be on the cusp of the fourth major bull market in crypto, although the exact timing is uncertain,” she said in a recent note

“Our belief is that the next bull market will be enabled by advancements in speed and scalability of the blockchain networks, more intuitive user interfaces, and innovations in blockchain wallets, as well as developments in digital identity, which will pave the way for Web3 applications.”

Venture funding aside, crypto markets are enjoying a healthy bear market reprieve. Bitcoin (BTC) is up by over 80% this year, while ether (ETH) is up 60%, as some forecast that recent bank failures could inspire the Federal Reserve to taper its aggressive monetary tightening.


Get the news in your inbox. Explore Blockworks newsletters:

  • Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
  • Empire: Start your morning with the top news and analysis to inform your day in crypto.
  • Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
  • 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
  • Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
  • The Drop: For crypto collectors and traders, covering apps, games, memes and more.
  • Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.
Tags

Upcoming Events

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research

article-image

Documents and sources suggest Neon Machine is running out of cash and has laid off nearly all its employees — and struck a deal with the Chinese government to stay afloat

article-image

The network is at a “pivotal juncture,” Blockworks Research’s Marc-Thomas Arjoon said

article-image

Altcoin trade volume has returned to pre-FTX levels, but with a shrinking pool of market leaders

article-image

Solana Foundation’s former head of strategy proposes increasing the disinflation rate

article-image

With much of the bitcoin mining supply chain based in Asia, US-based operations now face higher equipment prices

article-image

Anticipating an economic downturn, venture firms may be less likely to invest