VCs contributed $14.2B to the crypto industry in H1 2022, but investment pace is slowing – KPMG

KPMG noted that crypto investment figures remained well-positioned in H1 2022, but the market keeps slowing

VC crypto

VCs contributed $14.2B to the crypto industry in H1 2022, but investment pace is slowing – KPMG. Source: shutterstock.com

Venture capital firms poured $14.2 billion into crypto projects across 725 deals in the first half of 2022, but the global audit and consulting firm KPMG predicts investments will slow down for the rest of the year. 

The largest investments in H1 2022 went to German-based crypto trading platform Trade Republic ($1.1 billion), digital asset custody platform Fireblocks ($550 million), crypto exchange FTX ($500 million), and Ethereum software company ConsenSys ($450 million).

Authors of the new KPMG report noted that investment figures for the first half of 2022 almost doubled compared to all years prior to 2021. That “highlights the growing maturity of the space and the breadth of technologies and solutions attracting investment.” However, the record-breaking 2021 brought over-investment to the space. 

Considering a looming potential recession, rising inflation, interest rates and Russia’s war in Ukraine, a drop off in investment this year is highly likely.

In July, monthly inflows into the blockchain VC market already declined 43%, according to Cointelegraph Research. KPMG expects the slowdown of crypto investment to particularly hit retail firms offering coins, tokens and nonfungible tokens (NFTs). The projects with weak value propositions will not survive. 

At the same time, the crypto market itself will not fade away. Today financial institutions have become increasingly interested in blockchain infrastructure solutions and stablecoins. Besides, further crypto investment efforts will take place in underdeveloped fintech markets, particularly in Africa. In African economies, cryptocurrencies were more accessible than traditional banks during the pandemic and lockdowns. 

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