With venture funding for blockchain startups declining globally, crypto startup founders struggling to source funding might want to instead head to Europe, a region that's bucking the trend.

Global blockchain venture funding plunged in the second quarter of this year — declining 22% from $12.5 billion raised in the first quarter to $9.8 billion in the second, according to a recent report from The Block Research. 

Meanwhile the amount raised by blockchain venture startups is up 25% in Europe compared to the previous quarter, according to The Block Research's data. 

Africa is the only other region to see gains, with an increase of 189% from the first quarter to the second. Asia and the US saw declines of 43.4% and 23.8%, respectively. 

Europe’s recent gains mean it surpassed Asia by a slim margin for second position in terms of global share of blockchain venture funding raised. The US remained in the top spot with a total of $5.4 billion raised, compared to Europe’s $1.8 billion. 

Amount raised by continent in the second quarter from The Block Research

Some of the most active investors for European projects were Animoca Brands, Coinbase Ventures, GSR, Polygon Studios and Jump Capital, per The Block Research.

The global decline in funding is the first in blockchain venture funding since 2020. Previously there had been seven consecutive quarters of growth. 

Private funding is typically seen as a lagging indicator of the crypto sector’s health as there is a time delay between when deals are made and publicly announced.  

Venture funding could continue to decline as investors grapple with macroeconomic issues like rising interest rates and inflation, as well as the fallout from the bankruptcies of key industry players like Voyager and Celsius. 

The recent turmoil in crypto markets, however, has also spurred mergers and acquisitions, which is another bright spot in the second quarter data. The Block Research’s recent report shows that M&A transactions are on pace for a record year. 

Last year, 204 M&A transactions took place. Drawing on data from the first half of this year, M&A deals are on track to hit 212 this year. 

“Since the private markets have started to cool off, M&A activity within the sector will be worth following over the next few quarters,” said John Dantoni, a researcher at The Block research, in the report. 

“The valuations for private firms have been and will likely continue to re-adjust to the current market environment,” he added. “As a result, we expect to see M&A activity increase, particularly by larger firms in the industry.”