TLDR:
- Venture capital investments in crypto rebounded in Q2, with $3.2 billion invested, up 28% from the previous quarter.
- Quarter-over-quarter surge in median pre-money valuation to $37 million, highest since Q4 2021.
In the second quarter of 2024, venture capital investments in the crypto sector continued to rebound, with a total of $3.2 billion invested during the period. This marked a 28% increase compared to the previous quarter. Galaxy Digital’s latest research report also identified a significant 94% quarter-over-quarter surge in median pre-money valuation, which rose to $37 million from $19 million in the first quarter. This surge represents the highest median pre-money valuation since the fourth quarter of 2021.
The report attributed this surge to a more competitive market environment, giving companies greater negotiation leverage in deals. Additionally, the median deal size grew to $3.2 million from $3 million, up 7% after remaining steady for several quarters. While deal count fell to 577 in the second quarter compared to 603 in the first quarter, it was still higher than in the fourth quarter of 2023 where it was less than 400.
The report highlighted a positive shift in crypto venture capital sentiment, buoyed by a nearly 50% year-to-date rise in Bitcoin and Ethereum prices. If this trend continues, 2024 is expected to have the third-highest investment capital and deal count numbers after the bull markets of 2021 and 2022. However, the report also noted that despite Bitcoin’s significant price rise since January 2023, venture capital activity has not kept pace, trading well below the levels seen when Bitcoin last traded above $60,000 in 2021 and 2022.
Specific project categories led fundraising, with Web3 bringing in $758 million, infrastructure over $450 million, trading and exchanges under $400 million, and Layer 1 under $400 million. Bitcoin Layer 2 networks saw significant investments of $94.6 million, up 174% on a quarterly basis. US companies dominated VC investment, attracting 53% of all capital and 40% of deals. Despite regulatory changes, US remains a dominant force in venture capital investments in the crypto sector.
