Global Crypto Venture Capital Investment Sees Rebound in Early 2024

Global venture capital (VC) investment in cryptocurrency companies has surged quarter-on-quarter to $2.4 billion in the first quarter of 2024, according to data from PitchBook released on Monday.
Crypto VC deal activities Q1 2024 PitchBook
In Q1, cryptocurrency companies have raised $2.4 billion (up 40.3 percent quarter-on-quarter and down 18.1 percent year-on-year) from investors in 518 deals (up 44.7 percent quarter-on-quarter and down 15.8 percent year-on-year).

Infrastructure startups led the way in VC funding during the quarter, with the largest rounds raised by Ethereum restaking platform EigenLayer ($100.0 million Series B) and fully homomorphic encryption (FHE) development platform Zama ($73.0 million Series A).

The largest deal of the quarter went to Together AI, developer of an open-source, decentralized cloud platform for large foundation models. Together AI raised a $106.0 million early-stage round led by Salesforce Ventures.

In the Q1 2024 Crypto Report, Senior Analyst Robert Le highlights the factors pushing the vertical forward as well as new areas of focus for investors, such as startups working to bring blockchain technology to social media as well as those tinkering with established cryptographic techniques to solve challenges in data integrity and privacy.

The crypto venture capital business had previously peaked at $11.1 billion in Q1 2022, followed by seven consecutive quarters of declining investment volumes. By the last quarter of 2023, investments had dwindled to $1.7 billion.

“The crypto industry is in its early stages, and there is a lot of room for growth and innovation,” noted PitchBook senior analyst Robert Le in a report. “Barring any major market downturns, we expect the volume and pace of investments to continue increasing throughout the year,” he added.

The explosive growth seen in the crypto sector during 2020 and 2021 was driven by a combination of low interest rates and a high risk appetite. However, a series of high-profile bankruptcies in 2022, including the collapse of major crypto firms, rattled investor confidence and caused the price of Bitcoin to plummet.

Investors who had backed the U.S. exchange FTX faced significant losses, as their investments were written down to zero, leaving millions of people unable to withdraw their funds from various crypto platforms.

Despite these setbacks, the past year has seen a gradual resurgence in investor confidence. This has been partly fueled by U.S. regulators approving exchange-traded funds (ETFs) tracking Bitcoin’s spot price at the start of 2024.

Bitcoin has shown signs of recovery from its 2022 lows, reaching a new all-time high of $73,803.25 in March. However, the cryptocurrency has since struggled to maintain a clear direction.

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