Alex Omenye
In the first three months of 2024, funding for crypto startups surged for the second consecutive quarter, reaching a staggering $2.4 billion, according to data from PitchBook.
This significant uptick in investment comes amidst anticipation of decreased interest rates and the landmark introduction of the first U.S. bitcoin spot exchange-traded fund (ETF), enticing investors with promising prospects.
PitchBook reports that funding was dispersed across 518 deals, marking a notable 40.3% increase from the previous quarter. Meanwhile, global venture capital investments experienced a dip to nearly a five-year low during the same period.
Since its peak of over $10 billion in the first quarter of 2022, investor confidence in digital asset startups has been on a downward trajectory due to economic uncertainties and the cessation of key market players.
However, the regulatory green light for spot bitcoin ETFs in the United States, spearheaded by industry giants BlackRock and Fidelity, bolstered the credibility of the asset class. This development propelled Bitcoin to a record high of $73,803 in March.
PitchBook analyst Robert Le anticipates that the recovery of publicly traded tokens and the ongoing surge in institutional adoption will continue to fuel increased venture capital funding. Startups specializing in developing infrastructure for crypto and blockchain technology emerged as the frontrunners in securing funding during the quarter.
Notably, the largest deal of the period was clinched by the decentralized cloud platform Together AI, which raised a substantial $106 million in an early-stage round led by Salesforce Ventures. This injection of funds valued the company at an impressive $1.1 billion.
Le notes that investment rounds have become fiercely competitive, particularly in the early stages of development. He observes that early-stage deals are commanding higher valuations compared to late-stage counterparts, though the sustainability of this trend remains to be seen in the ensuing quarters.
However, exits within the crypto startup landscape remained relatively subdued. Le forecasts a surge in mergers later in the year, especially among crypto exchanges, custodians, and infrastructure providers, as the market matures and consolidation becomes a strategic imperative.
