PitchBook data indicates that funding for crypto startups increased to $2.4 billion in the first quarter of 2024, marking the second consecutive quarterly rise. This growth was driven by expectations of reduced interest rates and the launch of the first U.S. bitcoin spot ETF.
During this period, funding was allocated across 518 deals, representing a 40.3% increase from the previous quarter. However, global venture capital investments experienced a decline to nearly a five-year low.
Investor confidence in digital asset startups has waned since its peak in the first quarter of 2022 due to economic uncertainties and the closure of key market players. Nonetheless, the regulatory approval of spot bitcoin ETFs in the U.S. contributed to bitcoin reaching a record high of $73,803 in March.
PitchBook analyst Robert Le anticipates that the rebound in publicly traded tokens and the increase in institutional adoption will drive further VC funding. Startups focusing on developing infrastructure for crypto and blockchain technology attracted the most funding during the quarter.
The largest deal of the quarter was secured by Together AI, a decentralized cloud platform, which raised $106 million in an early-stage round led by Salesforce Ventures, valuing the company at $1.1 billion.
Le noted the intensifying competition in investment rounds, particularly at early stages, with early-stage deals commanding higher valuations than late-stage ones. He suggests monitoring if this trend persists in the upcoming quarters.
Despite the low number of exits, Le anticipates an increase in mergers later this year, especially among crypto exchanges, custodians, and infrastructure providers, as the market continues to mature.
