In 2023, regulatory clarity will be key to unleashing the floodgates of dry powderBack to news
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.