Venture Capitals Invested $14.2B in H1 2022, Now Seeing a Decline
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As per the reports by KPMG, the highest investments in H1 2022 were by the German-based cryptocurrency trading platform Trade Republic ($1.1 billion), Ethereum software provider ConsenSys ($450 million), Cryptocurrency exchange FTX ($500 million), and Digital asset custody platform Fireblocks ($550 million).
Highlights By The Authors
The authors of the research, including Anton Ruddenklau, global leader of fintech at KPMG, highlighted that the investment projections for the initial half of 2022 alone were already more than twice all the years before 2021. The authors stated in the report that this underlines the rising maturity of the space and the range of technologies and solutions attracting investment.
But according to Ruddenklau, excessive investment during the record-breaking 2021 and the initial half of 2022, as well as a potential recession, increasing inflation, higher interest rates, and the conflict between Russia and Ukraine, would cause investment to decline this year.
Data from July suggests that KPMG's forecast of a fall in crypto investment is already taking shape, with monthly inflows into the blockchain venture capital market falling 43% in the month.
Ruddenklau predicts that retail businesses that sell coins, tokens, and NFTs will be severely affected by the decline in interest in and investment in cryptocurrencies.
Ideal Condition of Crypto Enterprises
KPMG France Director of Blockchain & Crypto Assets, Alexandre Stachtchenko, claimed in the research that well-managed crypto enterprises with healthy risk management policies, long-term vision, and excellent cost and risk management approach will be in the ideal condition to survive the present bear market.
He also remarked,
"Of course, some cryptos will die out - particularly those that don't have clear and strong value propositions. That could actually be quite healthy from an ecosystem point of view because it'll clear away some of the mess that was created in the euphoria of a bull market. The best companies will be the ones that survive."
KPMG anticipates further investment initiatives in emerging fintech markets, notably in Africa.
The cryptocurrency exchange Binance has been working on this front. It recently began preliminary negotiations with the Nigerian government to establish a crypto-friendly economic zone to encourage long-term economic growth through technological innovation.