Venture funding into Web3 startups is finally picking up after a bruising year in 2023. Based on Crunchbase, about $2 billion in funding was secured for crypto ventures in Q2 2024.
Whereas this amount stands slightly above the $1.8 billion raised in Q1 2024, it shows a positive change. Quarterly venture funding to Web3 startups dropped dramatically last year—from $2.3 billion in Q1 2023 to only $1.4 billion by Q4.
The number of deals has also dropped with the funding. From 681 deals in Q1 of 2023, it dropped to 284 deals in Q4. The funding amounts did start recovering, but the number of deals still stays low, closing only 291 deals in Q2 of 2024.
Not only are there fewer deals, but they are also smaller in size. In Q2 2024, just seven deals reached more than $50 million.
Much of the recovery recently can be attributed to just one deal: New York-based Monad Labs raised $225 million led by Paradigm. Monad is building a new blockchain network that will vie with the likes of Solana.
- $150-million Series A for Farcaster, led by Paradigm at a $1 billion valuation;
- $100-million round for Berachain, led by BH Digital and Framework Ventures at a $1.5 billion valuation;
- $80 million round for Auradine with investors such as Mayfield Fund and Celesta Capital.
Much of the slow deal flow is due to the wait-and-see attitude that venture fund investors, known as limited partners, are adopting before committing funds to new deals while expecting returns from past deals. The available funds are also low for venture capital firms, according to Regan Bozman, co-founder of Lattice Capital.
"There's a gap forming where many crypto VC funds are almost out of money and need more within the next six months, but LPs want to see returns first," Bozman shared on the X platform. "VCs need the market to get better before they're able to provide those returns."
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