Crypto startup financing surged for the second consecutive quarter, reaching $2.4 billion in the initial quarter of 2024, as per Pitchbook data. This increase was fueled by anticipations of reduced interest rates and the launch of the inaugural U.S. bitcoin spot ETF, stimulating investor interest. The funding was distributed among 518 transactions, marking a 40.3% rise from the preceding quarter, according to PitchBook. Meanwhile, global venture capital investments dipped to levels nearing a five-year low during the same period.
Investor investments in digital asset startups have experienced a decline since their peak of over $10 billion in the first quarter of 2022, influenced by economic concerns and the closure of significant market players. Nonetheless, the milestone regulatory approval of spot bitcoin ETFs in the United States, provided by industry giants BlackRock and Fidelity, enhanced the credibility of the asset category and contributed to bitcoin reaching a record high of $73,803 in March.
Pitchbook analyst Robert Le stated “The recovery in publicly traded tokens and continued rise in institutional adoption will drive increased VC funding”. According to PitchBook, startups concentrating on constructing infrastructure for crypto and blockchain technology dominated funding activities during the quarter. The most substantial transaction was conducted by decentralized cloud platform Together AI, which secured $106 million in an early-stage round led by Salesforce Ventures, valuing the company at $1.1 billion.
Pitchbook’s Le noted that investment rounds have grown intensely competitive, particularly in the early stages. He highlighted that this is further accentuated by early-stage deals securing higher valuations compared to late-stage deals, although the sustainability of this trend remains to be seen in the forthcoming quarters.
Despite this, exits remained minimal. Le anticipates a surge in mergers later this year, especially among crypto exchanges, custodians, and infrastructure providers as the market matures.