Crypto startup deals are on the rise. Following a tough year for cryptocurrency and blockchain-related companies, new data reveals that venture capital investment in the industry increased by nearly one-third compared to the previous quarter.
According to PitchBook data, venture capital investment in crypto startups hit $2.5 billion during the first quarter of 2024, marking a 32% increase from the last quarter and roughly matching the same period last year.
Additionally, crypto startups are securing more funding, and venture firms are establishing new digital asset funds.
PitchBook crypto analyst Robert Le stated, “Investors are beginning to reinvest their funds. Over the past 18 months, they’ve been holding onto the capital they’ve accumulated.”
Le attributed the renewed enthusiasm for crypto in part to the approval of Bitcoin exchange-traded funds in January and growing interest in the convergence of crypto and artificial intelligence.
During the downturn of 2023 and late 2022, Venture capitalists were hesitant to tap into the funds raised during the previous crypto bull market. However, that trend is beginning to change this year.
Anand Iyer, managing general partner of early-stage venture fund Canonical Crypto, observed an uptick in funding activity in recent months. He noted that some founders seeking investment are not newcomers to the industry. “They actually built something during the last cycle that didn’t succeed,” Iyer said.
Certain early features of crypto that were prominent during the last bull market have resurfaced. For instance, the latest frenzy surrounding meme coins harks back to past crazes. Websites like pump.fun allow anyone with an internet connection to create whimsical tokens inspired by animals, pop culture, or virtually any other topic. “Iyer commented that while they are amusing, it’s undeniably a significant aspect of crypto culture.”
Other Venture capitalists are taking note of signs indicating maturity in the industry. John Lo, a managing partner overseeing digital asset investing at Recharge Capital, previously held a leadership role at the decentralized crypto exchange Sushi under the pseudonym “Omakase” and even used an Anime character filter to conceal his identity during a webinar appearance.
While Lo acknowledged that some teams are still raising capital under pseudonyms, he considers this trend a nostalgic “remnant” of past crypto culture. Instead, he and his team are optimistic about the impact of established financial institutions delving deeper into crypto, as evidenced by the approval of Bitcoin ETFs. “We’re witnessing Bitcoin being utilized and adopted on a scale we haven’t seen before,” he remarked.
Nevertheless, there is still room for improvement. Recharge is focusing on supporting startups capable of developing better crypto infrastructure and making the industry more appealing to investors. “Crypto is still in its early stages,” Lo emphasized.
