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40.3% Increase In Investments By Crypto Venture Investors In Q1

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Pitchbook, an industry and technology research platform, shared reports of investments by venture capital (VCs) for Q1 2024 in the second week of May. The report emphasized the growth in the number of deals and the amount of investment from venture capitalists in the crypto space.

As per the investment reports from Pitchbook for Q1 2024, the investments in crypto from venture capitals are found to be increasing. The number of quarterly deals followed an upward trend after 2021.

Pitchbook’s latest emerging tech research reported 518 venture capital deals worth $2.4 Billion, booking an increase of 44.7% and 40.3%, respectively. In the published report for Q1 2024, Robert Le, Senior Analyst at Pitchbook, highlighted the factors supporting the growth of vertical forward as well as new areas of focus for investors.

The areas of focus include startups working to bring blockchain technology to social media as well as those utilizing cryptographic techniques to solve challenges in data integrity and privacy.

The venture investments are mostly attracted to organizations working in the areas of blockchain networks, infrastructure and developer tools, access, Web3 and DeFi.

VC Activity in Crypto Decoded

Crypto fundraising increased substantially in Q1 2024, raising $2.4 Billion from 518 deals. Clearly, positive investor sentiment is back in the market post the major market downturns in the previous quarters. Analysts expect the volume and pace of investments to continue throughout the year.

Infrastructural startups bagged the highest funding during the year, with the largest rounds raised by EigenLayer, the Ethereum staking program, which raised $100 Million Series B funding and Zama, the fully homomorphic encryption (FHE) development program, which bagged $73 Million in Series A funding.

Together AI, the developer of an open source, decentralized cloud platform for large foundation models, achieved the largest deal of the quarter, raising $106 Million in the early stage round at a pre-money valuation of $1.1 Billion led by Salesforce Ventures

In the previous quarter, the firm raised Series A funding of $102.5 Million at a pre-money valuation of $463.5 Million. The major reason for the successful funding and tremendous growth in the valuation is the broader nature of the decentralized physical infrastructure network segment and the segment is expected to grow throughout the year, attracting investors’ attention.

Comparing Growth and Other Driving factors

In comparison to the whole of 2023, valuations have grown significantly across all stages for the quarter. The average pre-money valuation for the seed stage was reportedly $21.8 Million; for the early stages, it was $72 Million and the later stage had an average valuation of $51.1 Million. It represented YoY growth of 85.5%, 148.3% and 7.6%, respectively.

This tremendous growth mirrors the increase in competition among VCs, mostly for early-stage investment opportunities. It is ascertained from the higher valuation of early stage deals in comparison to late-stage deals.

The sizes of the invested deals are also showing strong growth, as the average size of the seed stage funding round was $2.7 Million, $5.0 Million for the early stage and $5.8 Million for the late stage. It represented an increase of 24.9%, 25% and a decrease of 9.7%, respectively, in the complete year 2023.

Notably, this research is subject to some flaws as the sample size of the research is relatively small as it is based on the data for a single quarter. The trend will be more viable in the coming quarters. 

Highlighting the Major Deals of Q1 2024

Important deals at pre-seed stage

Source: Pitchbook/ crypto report Q1 2024

Important deals at Early stage

Source: Pitchbook/ crypto report Q1 2024

The above two images show the major deals in the space in the first quarter of 2024, which led to a tremendous increase in funding for firms working in the crypto space. The increased funding will boost the growth of the sector as a whole. It will bring in new developments in space.

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