The amount of financing in the cryptocurrency field in 2023 fell by 68% compared to the previous year, to only $10.6 billion. However, top cryptocurrency venture capitalists are mainly optimistic about the prospects for 2024.
In 2023, the cryptocurrency financing field faced major challenges, with total investment plummeting 68% to $10.6 billion. This sharp decline contrasts with the $33.2 billion in total investment recorded in 2022 and is the lowest since 2020.
Several factors have contributed to this decline, including historically high interest rates, the rapid expansion of artificial intelligence distracting attention from cryptocurrencies, regulatory crackdowns, and the fallout from the collapse of prominent cryptocurrency platforms such as FTX, Celsius, and BlockFi.
What’s the outlook for cryptocurrency financing in 2024? We contacted the top 20 most active cryptocurrency venture capital companies and found that the current general sentiment is relatively optimistic.
Coinbase Ventures: A bright 2024
The venture capital arm of cryptocurrency exchange Coinbase continues to invest in difficult times in 2023 and is "increasingly optimistic" about the future.
A spokesperson for Coinbase Ventures said: “We believe that the intersection of four factors driving regulatory clarity (primarily outside the United States), maturity of protocol infrastructure, institutional participation, and user participation in on-chain product innovation will set the stage for 2024. We have paved the way for a bright future.”
"Our commitment is global and we remain steadfast, and we expect to intensify our activities in 2024."
Coinbase Ventures will continue to invest in areas that accelerate the introduction of the next billion users on-chain, including crypto infrastructure and consumer applications such as social networking and gaming, while also seeing opportunities at the intersection of artificial intelligence and cryptocurrency.
The company will also look to expand support for teams building on Base through the Base Ecosystem Fund.
Galaxy Ventures: 2024 will be challenging and dull
The venture capital arm of billionaire investor Mike Novogratz's Galaxy remains wary but committed to investing in early-stage projects.
Mike Giampapa, general partner at Galaxy Ventures, believes: “We expect the cryptocurrency venture capital environment to remain challenging. Even successful businesses and startups may have to raise capital at flat or discount prices. To raise funds."
Jampaba said the limited partner community "continues to be overly focused on illiquid investments," so new capital entering the venture capital space is "more restricted," and the financing environment is expected to "remain flat while interest rates remain elevated." But he also pointed out that as the possibility of industry consolidation increases, large companies may enter into M&A transactions with smaller companies.
At the same time, Jampaba said that startups with sustainable business models and proven product-market fit, such as blockspace and stablecoins, will receive more investment in 2024: “Blockspace is a compelling and relatively New products have achieved product market adaptability. Consumers are willing to pay more for each transaction due to the joint effect of applications, development talent, capital and users.”
And he pointed out that when it comes to stablecoins, the market is at the "tip of the iceberg" in terms of the long-term shift to the tokenization of on-chain assets: "We see many opportunities for new asset classes to be introduced on-chain for business-to-business and business-to-consumer applications to embed these new financial products into their existing offerings and provide opportunities for a new set of infrastructure companies for developers to drive adoption."
Animoca Brands: Very optimistic
Yat Siu, co-founder and executive chairman of Hong Kong-based Animoca Brands, said the company is "very optimistic" about the cryptocurrency financing environment in 2024 and expects "healthier" development.
Yat Siu said that as the crypto market rebounds, "there is a shift in momentum that may mark the beginning of a new bull cycle in the crypto market."
According to Siu, games and artificial intelligence with web3 components are likely to attract more investment in 2024: "Web3 games are about to accelerate, especially in Asia and the Middle East, and Europe is also showing considerable interest. Also On the one hand, artificial intelligence in games will create more engaging and responsive experiences, such as increasing the complexity and depth of NPCs, and enhancing content creation and asset generation."
Shima Capital: The crypto space is still in its early stages
Alex Wettermann, head of gaming at Shima Capital, an investor focused on early-stage projects, noted that he is "cautiously optimistic" about cryptocurrency financing in 2024. He expects infrastructure, gaming and digital verticals to receive more investment in the coming year.
Westerman said: "We remain extremely active in this space - we work with our portfolio companies, we do deep research, we talk to new companies. This is business as usual for us because we firmly believe that in a We are still in the early days of crypto in an increasingly digital, gamified, and tokenized world.”
HashKey Capital: “Bullish” on the future of cryptocurrency market
Xiao Xiao, an investment partner at HashKey Capital, an Asia-based crypto venture capital firm, said that a “bull market” is expected next year.
Xiao said HashKey will actively look for new investment opportunities, including "liquidity investments." The company also plans to expand its asset management business into new markets and launch diversified funds to suit different investment preferences.
Multicoin Capital: There are huge opportunities in the crypto industry in the field of artificial intelligence
Multicoin Capital managing partners Kyle Samani and Tushar Jain remain optimistic about 2024, especially given the recent momentum of the Solana ecosystem. Samani also believes that the encryption industry has "huge opportunities" in the artificial intelligence revolution: "Specifically, there is now a severe shortage of GPUs (graphics processing units), and the competition for these resources will increase exponentially." In addition, he He also added that there are opportunities for crypto industry-enabled computing markets and specialized cloud service providers to fill this gap.
Samani said: “Reinforcement learning products incentivized through tokens are another huge opportunity. Models need to be trained by humans to transfer knowledge. Cryptonetworks are excellent for organizing and incentivizing people around the world to contribute to common models. tool."
As for Tushar Ran, he predicts that “new neobanks, DeFi primitives, payment applications, entry and exit applications, and DEX” will emerge in 2024 to fill the gap left by the centralized lending platforms and exchanges that were cleared in 2023. Whitespace. Tushar Ran said: “These products will be better than previous DeFi projects and will be comparable to the user experience of hosting providers.”
Polygon Ventures: Optimistic about Web3 innovation and adoption
Abhishek Saxena, principal at Polygon Ventures, said: "Web3 funding may have bottomed out and the new year will attract more investment. A positive sign is that even in the bear market we still see There is strong developer activity, which shows that infrastructure construction is still ongoing."
He expects funds to flow toward consumer-facing use cases, including a resurgence in areas such as social networking, financial services and entertainment, and new track leaders may emerge. He also said that the tokenized vertical should attract stronger institutional investment in the coming year: "While 2023 is a year of building behind the scenes, I am optimistic that Web3 innovation and adoption will accelerate again in 2024. "
NGC Ventures: The bull market is about to begin
The three general partners of Asia-based NGC Ventures remain optimistic about the crypto market and venture capital in 2024.
Roger Lim of NGC said he prefers verticals such as artificial intelligence and cryptocurrencies, Bitcoin L2, modularity and zero-knowledge technologies.
The company's Wayne Zhu said he is paying attention to "intent-based protocols" because they promise to improve user experience, manage gas fees and slippage more effectively, and improve composability to attract more users.
At the same time, NGC’s Tony Gu said that he is focusing on two vertical areas: DePIN (decentralized physical infrastructure network) and DeSci (decentralized science). "DePIN, as a consumer-facing application layer, has the potential to drive mass adoption," Gu said.
He noted: “We’ve seen some interesting DAOs emerge, but as far as we know, an untapped area is the effort to decentralize funding of open source projects. I think there’s a lot of potential in this area, especially with artificial intelligence. Combined, for example, with decentralized machine learning models.”
Overall, NGC Ventures expects "the bull market to be in full swing" in 2024, but is "unsure how long it might last."
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