Web3 Venture Funding Stabilizes After Rocky 2023 – Crunchbase
After a year-long decline that began in 2023, venture capital funding is stabilizing with $2 billion in financing locked in by the second quarter of 2024.
While the Q2 numbers were slightly higher than the $1.8 billion raised in the previous quarter, Web3's quarterly venture funding overall showed a downward trend of roughly halving last year, from $2.3 billion in Q1 2023 to $1.4 billion in Q4, according to Crunchaz. .
The total discount rate reflected the funding. The total number of deals fell from a peak of 681 in Q1 of 2023 to 284 in Q4. Although the latest quarter's financing volume rebounded, deal volume continued to weaken, with only 291 financing rounds closed in Q2 2024, according to the data.
Not only are Web3 Venture offers still scarce, they are also more conservative in size. Only seven rounds exceeded $50 million in Q2 2024, Crunchbase said.
Indeed, much of last quarter's recovery can be seen in one deal: New York-based Monad Labs' $225-million funding round led by Paradigm. Monad is a new layer-1 blockchain network set to compete with Solana and others.
Related: Paradigm Leads $225M Funding Round for New ‘Solana Killer' L1
Other notable Q2 deals include Farcaster's $150-million Series A led by Paradigm, valuing the company at $1 billion; Berachain's $100 million round was led by BH Digital and Framework Ventures, valuing it at $1.5 billion. And Auradin's $80-million round from investors including Mayfield Fund and Celesta Capital, Crunchbase said.
The slow deal flow is partly due to venture capital investors – known as limited partners (LPs) – waiting to be paid from past deals before funding new ones, and venture capital firms (VCs) are running low on dry powder, Regan said. Bozeman, co-founder of venture firm Lattice Capital.
“Market fragmentation is starting to happen where many crypto VC funds are in the final 25% of their deployment and need more money in the next six months,” Bozeman said in a post on XPlatform. “But VCs want the market to bounce back before they make a distribution.”
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