German venture firm Picus Capital has launched a dedicated cryptocurrency investing arm and Web3 despite the current cryptocurrency slump.

The unit, dubbed Picus.xyz, will target Series A startups, providing both equity investment and tokens. The firm has already started supporting companies in the area with its portfolio of companies, including Nefta, a Web3 gaming platform, and Arda, a provider of risk management services for digital assets.

VC appetite for Web3 and decentralized finance has been flat this year compared to last year, but activity has slowed since the second quarter of 2022. In the third quarter, 24 deals worth $ 878.9 billion, up from 33 rounds totaling $2.3 billion in the first quarter, according to PitchBook Q3 2022 Emerging Technology Indicator.

Web3 and crypto have grown in popularity in recent years, but 2022 has been difficult, to say the least, for the sector. Coins like Bitcoin and Ethereum are trading well below their highs, and the industry has seen multiple bankruptcy filings, including crypto lenders Celsius Network and Voyager Digital. Countries around the world have also stepped up their efforts to regulate the industry.

Perhaps the biggest challenge for cryptocurrencies and Web3 was the implosion of the FTX exchange, which some have described as a “Lehman moment” for the industry. The failure of one of the biggest and most lauded players has left many investors questioning the future of such technologies.

In light of the recent crises, some investors have become more reluctant to invest. According to a survey conducted by PitchBook and the Web Summit technology conference last month46% of investors interviewed said they were slowing down their investments or pulling out of Web3 altogether.

Picus.xyz will seek investment in both the Web3 infrastructure and consumer sectors, but the former is where many venture capitalists are betting. Companies that offer back-end technology are less exposed to business fluctuations, and with Web3 considered to be still in its infancy, some see a lot of growth potential.

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