Cryptocurrency venture capital funding reaches $2.4 billion
According to Pitchbook data, funding for crypto startups increased for the second consecutive quarter, reaching $2.4 billion in the first three months of 2024. This surge in funding can be attributed to investor enthusiasm fueled by expectations of lower interest rates and the introduction of the first U.S. bitcoin spot ETF.
According to data firm PitchBook, funding was spread across 518 deals and saw a significant increase of 40.3% from the previous quarter. Global venture capital investments reached a nearly five-year low during that time.
Investor confidence in digital asset startups has been declining since reaching a peak of over $10 billion in the first quarter of 2022. This decline can be attributed to concerns about the economy and the closure of major market players. Nevertheless, the approval of spot bitcoin ETFs by prominent players like BlackRock and Fidelity had a significant impact on the credibility of this asset class, ultimately propelling bitcoin to reach an all-time high of $73,803 in March.
“The increase in VC funding will be driven by the recovery in publicly traded tokens and the continued rise in institutional adoption,” stated Pitchbook analyst Robert Le. Startups specializing in developing infrastructure for crypto and blockchain technology took the lead in funding during the quarter, as reported by PitchBook. An early stage round led by Salesforce Ventures valued decentralized cloud platform Together AI at $1.1 billion, making it the largest deal as it raised $106 million.
“The investment rounds have become extremely competitive, particularly in the early stages,” commented Pitchbook’s Le. “It’s worth noting that early-stage deals are currently fetching higher valuations compared to late-stage deals. However, it remains to be seen if this trend will continue in the upcoming quarters.”
However, exits remained low. It is anticipated that mergers will increase in the coming months, especially within the realm of crypto exchanges, custodians, and infrastructure providers, as the market continues to develop.
