According to a recent report, leading players in the cryptocurrency sector are adjusting their investment strategies amidst a broader pullback in the industry. In addition, Coinbase, recognized as the largest supporter of cryptocurrency startups based on the number of deals, has experienced a decline in its investing activity in recent months.
Crypto Giants’ Investment Evolution
PitchBook data reveals a 63% drop in overall crypto venture funding to $2 billion in the third quarter compared to the same period last year. Corporate venture capital arms, including Coinbase Ventures, have rapidly reduced their investments. The trend signifies a cautious approach among corporate investors, focusing on conserving cash amid market uncertainties.
Coinbase Ventures is still actively deploying capital but with a shift in focus. Hoolie Tejwani, Director of Corporate Development and Ventures at Coinbase, stated that:
The venture arm is now backing more startups outside the United States. This strategic move comes in response to increased regulatory scrutiny in the U.S. crypto industry.
However, while facing a slowdown, Coinbase Ventures has made over 50 investments across 15 countries in the past year, with a particular emphasis on regions such as India, Singapore, Australia, and the UK.
Similarly, the Venture arm of crypto exchange Kraken, Kraken Ventures, also acknowledges the downturn in deal counts over the last year. However, that firm still says it is active in making investments, with its current investment focus on startups from within and outside the crypto industry.
Moreover, Binance Labs, Binance’s venture arm, continues its investment approach despite U.S regulation hurdles. Dana Hou, in charge of business strategy and operations at Binance Labs, is actively seeking dedicated founders. She underlines the need to find true innovators.
Now, there’s a move in the entire industry towards backing startups that have real products and generate income. They are not just about hype. Binance Labs and other venture capitalists are pulling back from projects that rely simply on good buzz.
Hou pointed out the new focus on detailed examination and sticking to evaluating projects rigorously. They aim to avoid past missteps, like the well-known collapse of FTX. Major entities are adjusting their investment strategies to work through regulation issues. The goal is to keep growing in a market that’s becoming more developed.
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