Q1 2024: Breaking the 2-Year Crypto VC Funding Downturn

Venture capital (VC) funding in the cryptocurrency space experienced a positive shift in the first quarter of 2024, breaking a two-year decline. Data analysis platform Crypto Koryo published a report on the subject, revealing that both the total amount invested and the number of projects receiving VC funding have increased since the fourth quarter of 2023. The platform noted a 38% rise in funds invested during the quarter, along with a 49% increase in the number of funded projects. This surge in project funding is reminiscent of the fourth quarter of 2021, indicating a positive trend for VC funding in the crypto space. Crypto Koryo believes this could be the beginning of a new wave of investments in the sector.

The analysis platform also pointed out that, unlike previous quarters where traditional banks and non-crypto VC firms dominated investments, this quarter saw more interest from venture firms focused specifically on cryptocurrencies. Key players in this regard include Andreessen Horowitz Crypto, OKX Ventures, Multicoin Capital, Paradigm, and Polychain. These crypto-native VC firms dominated the funds invested during the quarter. In March alone, crypto VC funds poured over $1.1 billion into 180 different investments. VC funding in the crypto industry saw an impressive 52.5% increase in March alone, with investments primarily heading towards infrastructure and decentralized finance (DeFi) projects.

This increase in funding during the first quarter of 2024 follows a positive momentum that began in the fourth quarter of 2023. In the first quarter of 2023, crypto VC investments had risen by 2.5% compared to the previous quarter, marking the first increase since March 2022. The year 2022 had been challenging for the crypto industry, with a decline in venture capital funding alongside a struggling market. Quarterly drops were observed throughout the year in terms of venture capital investments.

The recent surge in VC funding for crypto projects demonstrates a renewed interest in the industry, indicating a potential reversal of the previous two-year decline. As the crypto market continues to evolve and gain traction, it is attracting more attention from specialized venture firms that recognize the potential for growth and innovation in the sector. This increased funding can fuel the development of various projects and initiatives, particularly in areas such as infrastructure and DeFi. Moving forward, it will be interesting to see if this positive trend in VC funding for crypto projects continues and how it shapes the future of the industry.