Overview
• Today, RockawayX and Dealroom published the State of European Crypto Funding report which details VC funding trends in Europe.
• The report highlights that European crypto startups attracted record funding ($5.7BN) in 2022, while US crypto startup funding declined YoY.
• London remains the crypto hub of Europe with more than half of European crypto VC funding going to companies building financial products and services.
Unicorn Creation
The report revealed that unicorn creation across all geographies peaked in 2021, where early-stage investors from the US contributed 21% and 29% to Seed and Series A investments in Europe’s crypto startups respectively. This trend is expected to continue as an increasingly hostile US regulatory environment pushes investors to explore other regions for opportunities.
Rise of Web3 Projects
The report further highlighted that Web3 projects are gaining traction with users mounting, big brand entrants, and increased venture funding. The majority of the venture capital funds have been directed towards companies developing financial products and services such as decentralized finance (DeFi), decentralized exchanges (DEXs), stablecoins, custodial solutions, etc.
Funding Trends
The report also revealed a surge in funding for companies building developer tools, roll-ups and Layer 1s during 2022 along with a steady flow of investment into blockchain networks such as Ethereum (ETH). These trends point to sustained investor interest despite market volatility caused by economic uncertainties due to the COVID-19 pandemic.
Conclusion
In conclusion, the State of European Crypto Funding Report highlights how venture capital activity has shifted from the US towards other regions such as Europe due to an increasingly hostile regulatory environment along with increased interest in Web3 projects. Moreover, there has been a surge in early-stage investments for companies working on cryptocurrency infrastructure solutions such as Layer 1s and Rollups during this cycle indicating sustained investor confidence amidst market volatility caused by economic uncertainties due to the pandemic.