What the numbers say: Global VCs invested $20.2B in the AI sector in Q2 2023, more than 10 times the $2.2B invested in crypto startups in the same period. While VC funding across all sectors experienced an 18% dip compared to the previous quarter, investment in the AI sector remained flat during the same period. At the same time, global VC investments in crypto dipped below 2020's levels. What happened: Investors' interest in crypto waned due to a recent string of bankruptcies, regulatory headwinds, and tumbling token prices. Meanwhile, their interest in the AI sector increased as "it's offering so many more use cases than blockchain," per Millennia Capital's managing partner Joe Zhao. As a result, several crypto-focused VC firms, namely Paradigm and Millennia Capital, are now pivoting completely into AI. Where to see the impact: Some investors, however, remain confident about the crypto sector, especially the intersection of AI and crypto. Startups such as Tools For Humanity and Gensyn that are working in both sectors were able to nab substantial funding during the second quarter. |
