The world’s venture capital is ready to be deployed on the real use cases of blockchain and crypto, but we need regulators to meet us half-way, writes Tim Heath.
There’s been a lot of analyst chatter in recent months about 2022 being the year that the venture capital party ended — at least from the perspective of start-ups. And going by numbers alone, that does seem to be the case. In the third quarter of 2022, VC funding totalled just $81 billion, according to Crunchbase. That’s a 33% ($40 billion) shortfall over the previous quarter, and an astounding 53% ($90 billion) lower than the same quarter in 2021.
However, this isn’t because investment funds are failing to raise a satisfactory quantum of capital. Quite simply, fund managers are becoming more discerning about what they deploy in the aftermath of some spectacular private sector blow-ups and against the backdrop of a (still ongoing) volatile macro-landscape.
As a result, the industry has amassed an unprecedented level of dry powder. According to Pitchbook, global venture firms were sitting on $585.5 billion of capital raised — but not allocated — as of the end of Q3 2022. That’s up 2.6% from Q4 2021.