Crypto startups raised slightly more from venture capital funding in Q2 compared to the first quarter of the year — despite the total number of deals falling, according to data from Pitchbook.
In an Aug. 9 report, Pitchbook said there was a 2.5% increase in total invested capital, but a 12.5% decline in the number of deals compared to Q1.
Pitchbook says this could mean more promise from institutional investors in the market.
“With positive investor sentiment returning to crypto and barring any major market downturns, we expect the volume and pace of investments to continue increasing throughout the year,” wrote Pitchbook.
Pitchbook noted that infrastructure projects lead the way in Q2 funding, with layer-1 platform Monad raising $225 million in a Series A funding round, DeFi protocol BeraChain — which touts a new proof-of-liquidity — model raising $100 million in a Series B round, and Bitcoin restaking platform Babylon raising $70 million in an early-stage round.
Additionally, Pitchbook noted two “mega-rounds” — decentralized social media protocol Farcaster raised $150 million in a Series A round at a $1 billion post-money valuation and blockchain gaming platform Zentry raised $140 million in an early-stage round.
However, funding for crypto startups in the last 18 months has slowed significantly from 2021 and 2022 which saw a respective $25.3 billion and $29.4 billion in new capital raised.
Related: Crypto venture capital funding hits $1B for second straight month
Total investment for crypto firms in 2023 reached $10.1 billion, while the current year is on track to raise $10.8 billion at current rates.
Crypto venture capital has slowed considerably in 2024 compared to 2021 and 2022. Source: Pitchbook
The report also noted that the crypto startup round had become increasingly competitive at earlier fundraising stages but less so at later stages.
According to DefiLlama, more than $102 billion in funding has flowed into the blockchain industry across 5,400 funding rounds since June 2014.
The report comes less than three months after venture capital firms Pantera Capital and Paradigm sought to raise $1 billion and $850 million, respectively, for new crypto funds.
A $1-billion raise from Pantera Capital would be the largest for the cryptocurrency industry since May 2022, when Silicon Valley-based venture capital firm Andreessen Horowitz (a16z) raised a record-setting $4.5 billion.
a16z said it raised $7.2 billion in May to invest in several technology sectors, including artificial intelligence and gaming, but it elected not to top up its cryptocurrency-focused fund.
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