March was a tough month in the world of VC-funded crypto projects struggling with the impact of COVID-19. But April was even worse.
Disclosed funding decreased more than 50% in all deals to just $ 50 million, compared to $ 117 million last month (excluding the $ 300 million Bakes deal) according to the Web3 April Financing Report through Ana.vc. It is a sign of how much belt tightening has already taken place as a result of the coronavirus pandemic in the traditional economy, even though many cryptocurrencies continue to rise.
Decrypt reported that last month Venture capital financing has declined since 2019, but this month’s numbers are a strong example of how much the current economic environment has scared investors.
With US unemployment related to the coronavirus approaching 15%, fears of an ongoing economic slowdown are mounting. Congress and the Federal Reserve have allowed unprecedented stimulus payments in multiple sectors of the economy, but many inside and outside the venture capital world reject the idea of paycheck loans to pay for startups with wealthy lenders.
It all comes down to a much weaker growth outlook for venture capital investment with little or no support from government sources.
But of the deals signed in April, DeFi and FinTech projects attracted the most interest, at nearly 40%. Combined with enterprise and blockchain infrastructure projects, the three categories represent more than 60% of all April deals. And despite the growing media coverage, no deals were made gaming related projects in April.
Within the DeFi / Fintech ecosystem, all categories of lending, banking, exchange and trading saw multiple projects to raise funds. Notable fundraising activity for the month included Nuclear loans, Cadence, and dForce, whose deal was somewhat overshadowed by the attack against the China-based platform.
Despite the lower disclosed total, the number of seed funding rounds has even increased from March 13 to April 16, indicating that there is still interest in early-stage investments that could pay off. However, the total number of deals declined by 32 compared to 39 the previous month.
About half of all deals were closed in April with projects based in North America, with the UK hosting about 21% of the projects and the rest of Europe accounting for about 14%. The rest of the world captured only 17%.
“Part of the reasons for this split could be the available funding,” Outlier Ventures investor Ana Yanakieva said in the report. “The US has more private funding available, and the UK and Europe have multiple innovation grant programs, in addition to some private equity from institutions and angels. I see many pre-seed internship companies in Europe that need at least a few months to get investors ready. ”