Venture capitalists claim that the dynamics surrounding GameFi funding have evolved, shifting away from the influence of ‘FOMO’.

Venture capitalists are approaching blockchain gaming projects with a more cautious and sustainable mindset compared to the previous bull run, according to industry insiders. During the previous frenzy, VC firms invested heavily in GameFi projects without proper due diligence. Some projects received massive funding, reaching up to $100 million, despite having only a small team and ambitious promises. Keiran Warwick, the founder of GameFi studio Illuvium, who recently secured $12 million in VC funding, echoed this sentiment, stating that the investor frenzy was driven by a fear of missing out (FOMO). However, VC firms have now learned from their past mistakes and have expanded their checklists to include factors such as gameplay, artists, developers, and security audits. This more thorough evaluation process helps weed out illegitimate projects. LongHash Ventures, a cryptocurrency-focused VC firm, has increased its investment in GameFi projects this time around. They have supported top-tier projects like Yield Guild Games, Guildfi, Snack Club, Moonveil, and Ignite Tournaments. LongHash Ventures hopes to stay ahead of the curve and capitalize on the next wave of FOMO. Gabby Dizon, co-founder of Yield Guild Games, highlighted that VCs are now more aware of the cyclical nature of cryptocurrency markets and have learned from their past mistakes of investing at the peak of the previous bull market. The GameFi sector experienced a decline in funding for six consecutive quarters after the first quarter of 2022. However, the trend was reversed in the third quarter of that year, and there have been three consecutive quarterly increases since then. In the last quarter, GameFi projects received a total of $268 million in funding. Overall, VC firms are adopting a more cautious approach and are focusing on sustainable and promising GameFi projects.