PitchBook reports that VC fundraising could peak in 2023. Tighter regulator scrutiny, scandals and financial uncertainty have deterred investors. However, PitchBook says VCs will break their funding record in 2026 for a reason.
Venture capitalists are feeling better about crypto again.
According to a report from PitchBook, VC funding this year is on course to surpass $2.6 billion raised in 2023.
The data suggests that VC appetite for crypto investments is slowly returning after grounding the bear market in 2022 and early 2023 and facing regulatory challenges in the US as well as the European Union.
“We anticipate another fundraising peak in 2026, coinciding with the next anticipated major cycle in the crypto market,” Robert Lay, senior emerging technology analyst at Pitchbook, wrote in a report released Thursday.
“The crypto industry has historically followed a four-year cycle,” Lay said, “often associated with the events of the Bitcoin halving, which has significant market effects.”
Splitting refers to a quadrennial event where Bitcoin crypto miners confirm that the blockchain has been halved. The last half happened in April.
In 2023, the bottom fell out of the crypto VC fundraising space in the wake of the FTX scandal and several bankruptcies in the market. VC fundraising fell nearly 90% to $2.6 billion and raises fell from 163 to 49.
With just 24 rounds raising $2.2 billion this year, there's still plenty of time to reach the giddy heights of a few years ago. But consistency counts.
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“The rebound can be attributed to the overall recovery of the crypto market, in which the total crypto market cap reached 93% of the previous cycle's watermark in March 2024,” Le said.
Major investors
VCs may also be bolstered by Wall Street's adoption of bitcoin as a legitimate asset class suitable for mainstream investors.
BlackRock, Franklin Templeton, Van Eck and other giants issued top cryptocurrency exchange-traded funds in January and quickly attracted billions of dollars.
“The data includes only closed funds, with several large funds actively raising, which will contribute to large fundraising over the next 12 to 18 months,” Le wrote.
Eric Johnson is the news editor for DL News. Got a tip? Email at [email protected].
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