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Crypto Venture Money Rises in Second Quarter – But Number of Deals Shrinks: Report

August 12, 2024

Crypto startups attracted $2.7 billion in venture capital (VC) during the second quarter of 2024, according to PitchBook data.

As reported by Bloomberg, this represents a 2.5% increase from the previous quarter but a nearly 10% decline compared to last year.

Deal activity, however, fell by 12.5% from the first quarter.

The digital asset market faced significant challenges following earlier highs that were largely driven by the launch of Bitcoin exchange-traded funds (ETFs) in the US. Bloomberg estimates reveal investor inflows into these ETFs plummeted by 80% in Q2,

Says Rob Hadick, a partner at Dragonfly crypto venture fund,

“While VC investment in crypto peaked in March and April, activity slowed as the broader market turned negative in late April and May.”

According to the report, despite these challenges, some analysts are optimistic about future fundraising, citing potential improvements in token prices and institutional adoption.

Says Jason Kam, founder of Folius Ventures,

“The rise in project valuations reflects founders attempting to capture a more optimistic secondary market.”

Investment continues to focus on infrastructure projects, with VCs showing caution toward consumer applications. Only one major funding round for a crypto application was recorded in Q2, highlighting a shift towards application-based investments.

Exit activity reached its highest level since early 2022, with 26 exits reported, signaling ongoing consolidation in crypto exchanges and infrastructure providers.

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