After a dull period in venture capital investments, startups in crypto have seen such investments rising in the first quarter of 2024.
The first quarter of 2024 has become a positive one for crypto startups. According to data, startups in crypto saw an increase in funding in 2024 after three consecutive declining quarters. These startup crypto projects were a part of 603 deals this year, resulting in $2.49 billion of venture capital investments. It marks a 29% rise from the previous quarter and a 68% jump in the number of deals.
Galaxy Research reflected all this data in their research report. The trend may indicate that the last quarter of 2023 has bottomed the decline. However, only a subsequent increase every quarter in 2024 would confirm the trend.
The research report also cited multiple reasons for the recovery. It mentioned factors like spot Bitcoin ETFs and innovation in modularity, restaking, and Bitcoin layer-2 solutions. But it also credits macroeconomic factors like global interest rates.
Earlier, Bitcoin’s prices were directly linked to venture capital investments in startup crypto projects. However, this factor weakened in 2023, when Bitcoin’s recovery did not lead to an improvement in investments. The venture investment levels still have to reach levels of earlier bull runs when they soared for startups.
The report further said, “In Q1 2024, about 80% of the capital went to early-stage companies, while 20% went to later stage companies.” Crypto-focused venture capital (VC) funds reportedly led these funding rounds, while generalist VCs exited or reduced exposure.
The research report also shed light on the size of the deals and the categories that led them. The ‘infrastructure’ category was the leader, followed by categories like web3 and trading. Startups in the US attracted the most deals, with Singapore, the UK, Switzerland, and Hong Kong coming next.
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