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The year 2023 unfolded as a dynamic chapter in the realm of crypto investments, characterized by a series of highs and lows that reshaped the industry’s landscape. As the crypto industry navigated through quarterly fluctuations and witnessed the emergence of pioneering projects, the fundraising landscape became a fascinating journey of exploration and adaptation. This blog delves into the nuances of fundraising activities throughout the year, exploring notable developments, top projects, and expert insights that defined the crypto investment scene in 2023.
Fundraise Overview
Sources Cryptorank and Galaxy Digital (Data is as of Mid-December)
In Q1, $3.06 billion flowed into 351 deals, primarily directed toward trading, exchange, investing, and lending, with wallets also garnering notable interest from VCs and Angels. Moving into Q2, $2 billion was invested across 274 deals, maintaining focus on trading, exchange, investing, and lending, while also expanding into areas like NFTs, Gaming, DAOs, and the Metaverse.
Further, Q3 marked a new low, witnessing investments of $1.44 billion across 223 deals. It was the lowest since Q4 2020, with a consistent focus similar to Q2. Q4 saw $2.41 billion being injected into over 276 deals. As seen in the chart above, Blockchain Services emerged to be the winner being the vertical that raised the highest amount of funding in every single quarter of the year.
Regarding VC-launched funds, Q1 witnessed the highest number of new funds (14) and they cumulatively raised $2.2 billion. 12 new funds were launched in Q2 raising $720 million in investments, and $1 billion was cumulatively raised by 15 funds in Q3.
Top Raises by Web3 projects in 2023
| Project | Category | Funds Raised | Notable Investors | About |
| Matter Labs | Infrastructure | $458 Mn | Blockchain Capital | Matter Labs is the creator of zkSync, a scaling and privacy engine for Ethereum. Its current functionality scope includes low gas transfers of ETH and ERC20 tokens in the Ethereum network, atomic swaps & limit orders as well as native L2 NFT support. |
| Wormhole | Infrastructure | $225 Mn | Coinbase Ventures, Multicoin Capital, ParaFi, Borderless Capital | It is an interoperability platform empowering development and growth across blockchains. It has facilitated the transfer of over $35 billion in value and processes over 2 million cross-chain messages across 30+ chains every day. |
| Islamic Coin | Crypto Asset | $200 Mn | Alpha Blue Ocean’s ABO Digital | It is a halal digital asset, designed to create value for the Muslim community. It is built on the native Haqq blockchain and strictly abides by Islamic Finance principles |
| LayerZero | Infrastructure | $120 Mn | Andreessen Horowitz, Sequoia Capital | It is an omni-chain interoperability protocol which enables dApps to build efficiently across multiple blockchains using on-chain Ultra Light Nodes, combining security and cost-effectiveness. |
| Worldcoin | Infrastructure | $115 Mn | Blockchain Capital, a16z, Bain Capital Crypto, and Distributed Global | It is an open-source protocol which aims to create the world’s largest identity and financial public network by collecting unique digital identity based on iris scans. |
Most Active Funds
| Rank | Fund Name | Lead Investments | Investments | Total Investments |
| 1 | Coinbase Ventures | 5 | 34 | 39 |
| 2 | Polygon Ventures | 3 | 34 | 37 |
| 3 | DWF Labs | 5 | 31 | 36 |
| 4 | HashKey Capital | 4 | 32 | 36 |
| 5 | Shima Capital | 8 | 25 | 33 |
| 6 | Big Brain Holdings | 2 | 29 | 31 |
| 7 | Animoca Brands | 7 | 23 | 30 |
| 8 | Binance Labs | 5 | 25 | 30 |
| 9 | Arbitrum Foundation | 0 | 29 | 29 |
| 10 | a16z | 21 | 8 | 29 |
Fundraise by Geography
Despite the ongoing regulatory challenges in the US, projects operating within US jurisdiction managed to raise funds through 261 funding rounds, accumulating a total of $2.77 billion, followed by the United Kingdom, where projects raised a staggering $866 million across 55 funding rounds. Interestingly, projects with undisclosed jurisdictions secured funding through 404 rounds, amassing a total of $1.94 billion during the same period.
Crypto Winter about to be over?
Fundraising hit a three-year low in Q3 ’23, but a notable resurgence in Q4 ’23 was observed. October saw 112 deals amassing $430.56 million, while the first half of November recorded $514.62 million across 62 deals, indicating deployment of dry capital present with the funds.
In 2023, many new funds entered the market, although a majority of them struggled to secure early closures due to challenges in attracting capital from Limited Partners (LPs). LPs, in turn, hesitated to commit to these funds, as their investments were tied up in larger ones that failed to meet anticipated returns.
Looking ahead, close attention will be on the growth trajectory of blockchain services, DeFi and AI projects in the coming year. Despite setbacks in GameFi and NFTs earlier, signs of a potential revival emerged in Q3, and the Q4 figures also indicate a resurgence, signalling their return to prominence in the market.
Expert Opinions
Timothy Enneking, Managing Partner, Psalion VC
Crypto’s 2023 was a dumbbell: Big Q1, flat-to-negative Q2 and Q3, and big Q4. That pattern is a bit of a rarity in crypto.
2024 shouldn’t be: We will see the typical run-up to the halving (~28/29 April, depending on where you live), a “buy on the rumor, sell on the news” decline for several months afterwards, and a bullish end to 2024.
Then 2025 (like 2021, 2017 and 2013) will rip the doors off the car through acceleration!
At least, that’s what has happened three times in the past (the only data points we have). Because of much greater institutional involvement since the last cycle, all of those trends will be tempered: the run-up to the halving has already begun a bit early (perhaps due to court, regulatory (read: ETF) and other developments- but not exclusively). The continued price growth and the drop after the halving will probably be less and the “Great Bull Market of 2025” will probably start in 2024. Why? Because the whole world knows of the prior trends and most people, particularly institutions, will try to front-run it all!
The foregoing is all about Bitcoin, but with over 50% of the market (it actually hit 55% in early December), the rest of the market will surf in BTC’s wake. Lots of projects will break out more, of course, but none of them will come close to the impact of BTC (and its ETF).
José F. Pereira, Partner, Caerus
In 2023, crypto quietly achieved significant progress. Major institutions and brands began to adopt it, boosted by advancements in blockchain infrastructure like Layer 2 solutions, account abstraction, compressed NFTs, and Web3 phones. These developments and broader market influences, such as ETFs and halving events, shifted the sentiment from cautious scepticism to a more optimistic outlook.
At Caerus, we are witnessing a paradigm shift transforming the industries of culture – sports, music, entertainment and gaming – driven by evolving consumer behaviour and technology. The convergence of groundbreaking technologies such as Artificial Intelligence, blockchain, and spatial computing is playing a pivotal role in this evolution as they streamline processes, reduce operational costs, and open new avenues for value creation, thereby reshaping the dynamics of financing, production, distribution, and consumption within these industries.
Traditional value chains are being disrupted. From fan financing platforms unlocking capital to direct-to-consumer marketplace models redefining creator/intellectual property compensation. Or from AI tools democratising the production of premium quality content to VR hardware/software, turning passive consumption into active experiences. These platforms empower those who create culture while rewarding those who consume it with ownership and involvement, addressing consumer pain points with technological solutions and fostering transparent and equitable incentive structures.
At Caerus, we focus on the picks and shovels disrupting the cultural value chain and have deep conviction that the “killer app” bringing a billion users to crypto will emerge at the intersection of blockchain and culture.
Crypto Outlook 2024
2023 was a roller-coaster ride for the crypto sphere, marked by dynamic shifts, innovative advancements, and transformative trends that reshaped the industry’s landscape. Our Crypto Outlook Report for 2024 reflects on the highs, lows, and pivotal moments that defined the past year, while also peering into the horizon to forecast the exciting potential and emerging patterns set to influence the year ahead, with insights from industry leaders at Stepn, Enjin, Hacken, SuperScrypt, and more.
Click here to read the full report!
