Crypto startups are struggling in attracting private financiers after the collapse of digital-asset exchange FTX, with venture capital investment down to $2.3 billion in the fourth quarter, a 75 percent drop year-on-year.

The investment was also the lowest level for crypto startups in almost two years.

Venture capitalists had already begun reducing their investments but the FTX implosion in November prompted them to pull back even further, said Robert Le, a crypto analyst at the research firm PitchBook.

Le noted that investors are trying to see what’s going to happen next and there isn’t a rush to deploy capital.

Enthusiasm for the industry led to a record $26.7 billion investment in blockchain startups last year, most coming in the first quarter. That number represented a slight increase compared to 2021.

According to David Pakman, managing partner at cryptocurrency VC firm CoinFund, venture capitalists who are still interested in cryptocurrencies are now spending more time performing due diligence. They are lobbying for board seats and demanding more robust investor safeguards. He added that valuations are also becoming more realistic.

Le from Pitchbook still anticipates a rise in crypto venture capital spending over the summer because many crypto funds are required to use the substantial sums of money they collected during the spike in digital assets.