Crypto winter may be thawing. Despite fewer deals, venture capital is still flowing into the space.
Latest news for cryptocurrency — Crypto startups managed to secure a bit more venture capital in Q2 compared to Q1, despite fewer deals being made, according to data from Pitchbook.
In its Aug. 9 report, Pitchbook highlighted a modest 2.5% uptick in total capital raised but noted a 12.5% drop in the number of deals compared to the previous quarter. This trend, according to Pitchbook, could signal growing confidence from institutional investors in the crypto space.
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.”
Infrastructure projects took the spotlight in Q2, with layer-1 platform Monad securing $225 million in a Series A round, DeFi protocol BeraChain raising $100 million in a Series B round, and Bitcoin restaking platform Babylon pulling in $70 million in early-stage funding.
Pitchbook also pointed out two “mega-rounds” in Q2 — decentralized social media protocol Farcaster raised $150 million in a Series A round, reaching a $1 billion post-money valuation, while blockchain gaming platform Zentry attracted $140 million in early-stage funding.
The heady days of 2021 and 2022, when crypto startups raked in a combined $54.7 billion in venture capital, are firmly in the rearview mirror. While the industry managed to secure a modest uptick in funding during the second quarter, the broader trend over the past 18 months has been a significant slowdown. The total investment for 2023 is currently at $10.1 billion and projections are hovering around $10.8 billion.
Since June 2014, over $102 billion in funding has flowed into the blockchain industry across 5,400 funding rounds, according to DefiLlama.
This report comes just months after venture capital giants Pantera Capital and Paradigm announced plans to raise $1 billion and $850 million, respectively, for new crypto funds. If Pantera succeeds, it will mark the largest rise in the crypto space since May 2022, when Andreessen Horowitz (a16z) set a record with its $4.5 billion fund.
While a16z raised $7.2 billion in May for investments in tech sectors like AI and gaming, it opted not to expand its cryptocurrency-focused fund.
