Crypto VC Investment Reaches $3.2B in Q2, Defying Market Lull: Galaxy Digital

Venture capitalists are showing continued interest in the crypto sector, defying the market lull, according to a recent report published by Galaxy Digital.

In the second quarter of the year, crypto startups managed to raise an impressive $3.2 billion, marking a 28% increase from the $2.5 billion raised in the previous quarter.

While this figure is still a substantial distance from the nearly $10 billion invested in crypto projects during the second quarter of 2022, the report indicates that “crypto venture capital sentiment continues to improve.”

The rebound in venture capital interest in the crypto industry follows a trend observed earlier this year, which aligned with the rise in crypto prices.

However, despite Bitcoin hitting an all-time high in March, crypto venture capitalists have not matched the broader market’s enthusiasm, especially as Silicon Valley remains preoccupied with AI-related developments.

Web3 Projects Attract Significant Amount of Funding

Within the $3.2 billion invested in the crypto sector, a significant portion was allocated to web3 projects.

Startups involved in web3, decentralized autonomous organizations (DAOs), the metaverse, and gaming captured 24% of the VC capital, amounting to $758 million.

Notably, the largest raise in this category was the $150 million secured by Farcaster, a social media protocol.

Layer 1 projects and Bitcoin layer 2 solutions also attracted substantial capital, as indicated by Galaxy Digital.

Monad Labs, aiming to build a faster version of Ethereum compatible with Ethereum’s coding language, raised $225 million, making it the largest funding round of the quarter.

Additionally, Berachain, a layer 1 project, secured $100 million at a valuation of $1.5 billion, according to Bloomberg.

Investor interest in Bitcoin layer 2 solutions, which aim to facilitate more efficient transaction processing on top of the Bitcoin blockchain, also witnessed significant growth.

Overall, the report highlighted a total of 577 crypto deals in the second quarter, with early-stage investments accounting for nearly 80% of total funding.

Crypto Startup Funding Surpasses $100 Billion

Crypto startups have experienced a significant surge in funding over the past decade, surpassing the impressive milestone of $100 billion since May 2014.

The peak of cryptocurrency startup funding was reached in October 2021, with over $7 billion raised during that month.

The second-highest recorded funding occurred in February 2022, totaling $3.67 billion.

Recent research indicates that nearly half of all cryptocurrency funding originates from investors in the United States.

The remaining investments are distributed among various countries, with the United Kingdom accounting for 7.7% and Singapore for 5.7%, based on figures from the second quarter of 2023.

Notably, a series of high-profile funding deals have taken place between late 2023 and the first half of 2024.

Together.AI and cross-chain protocol Wormhole secured investments of $225 million each, while open-source cloud storage firm Totter and Eigenlayer raised $101 million and $100 million, respectively.

Other notable funding rounds include Swan Bitcoin’s $165 million raise and Blockchain.com’s $110 million.

These substantial investments highlight the continued confidence and interest in the cryptocurrency industry.