Crypto VCs Drop $594M in May—Bullish or Desperation Play?

Blockworks Research just spilled the beans: venture capitalists funneled over half a billion into crypto last month. That’s $594 million of ’conviction’—or FOMO dressed up in a suit.

Who’s betting big? No names dropped, but you can bet the usual suspects are doubling down while retail investors nurse their 2022 hangovers. Smart money or dumb money? The chain never lies.

Here’s the kicker: VCs keep writing checks like it’s 2021, but the market’s still waiting for that ’adoption’ they keep tweeting about. Maybe this time’s different—or maybe they’re just inflating the bubble with institutional-grade air.

As you can see, funding made up a very small slice of the overall pie, with M&A leading the month when it comes to money spent. A little over $2.9 billion went towards deals last month, of which most of that sum came from the $2.9 billion Coinbase-Deribit deal. 

Overall, funding was on the smaller side, especially in comparison to the last few months. Is that concerning? I personally don’t think so. Not unless it becomes a trend, and it WOULD take a few more months in a row to establish that. 

There were roughly 61 raise announcements, again slightly lower than what we’ve previously seen, as depicted in the chart below. 

While momentum clearly slowed, it’s on par for the season. Taking a look at the activity from last May to now, it looks like both years have seen a dip. 

There’s nothing that’s changed sentiment-wise that seems concerning, which would lead me to believe the dip is seasonal. But we’re going to have to see how June looks. 

Per the TIE Terminal, it looks like the average venture capital round announced last month was the seed stage, with strategic rounds coming in second. 

Seed rounds tend to be smaller rounds, since they’re among the first rounds raised by projects so that could contribute to the overall sum. Strategic rounds can also be small, given that they’re generally a way for a start-up to not only access some capital but also support from investors. 

So not the most impressive month but, like I said, it’s not too concerning yet. The end of June will wrap up the second quarter, and we’ll be able to take that data and compare it to the performance from the first quarter. 

Pitchbook’s Robert Le previously told CNBC that he expects crypto funding to top $18 billion this year, and that number still looks like a real possibility as of now.

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