In a notable change from the previous quarter, venture capital (VC) funding in the cryptocurrency sector saw a slight increase in overall investment value in Q2 2024, although the number of deals showed a significant decrease.
According to the latest Pitchbook report, startups in the crypto space raised a total of $2.7 billion across 503 deals. The good news is that it represents a 2.5% increase in investment compared to Q1 2024, but there is a 12.5% decrease in contract volume.
The report highlights a growing trend towards larger deal sizes as investors continue to show confidence in the crypto market despite ongoing regulatory challenges and market volatility.
“Increasing deal prices but a low deal count suggest that prices generally increased during the quarter,” the report said.
Compared to Q1 2024, the change in investment dynamics is evident.
While last quarter saw a high volume of deals, the focus in Q2 seems to have shifted to quality and scale, with large investments concentrated in a small number of companies.
“We expect the volume and pace of investment to continue to increase throughout the year, with positive investor sentiment returning to crypto and barring any major market downturns,” the report added, hinting at a strong second half of 2024.
Infrastructure startups led the way in receiving funding, the largest rounds going to Monad, a parallel layer 1 platform, which raised $225.0 million in a series of rounds; DeFi-specific L1 Berachain, which raised $100 million in Series B; And the Bitcoin re-platform Babylon, which raised $ 70 million in the first-stage round.
In addition, blockchain-based social media platform Farcaster raised $150.0 million in a Series A round, indicating a post-funding valuation of $1.0 billion.
The report also provides insights into the broader venture market, highlighting that valuations for seed and early-stage investments are lower for late-stage rounds.
Specifically, the average pre-funding estimate for seed-stage companies rose 97.0% to $23.0 million from full-year 2023, and early-stage valuations rose 166.0% to $63.8 million.
In contrast, late-stage valuations fell 36.0% to $40.8 million, reflecting a cautious approach by investors in later stages of company growth.
Edited by Stacy Elliott.
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