TLDR:
Key Points:
- The crypto venture capital market rebounded in the second quarter of the year.
- The median pre-money deal valuation soared to $37 million, indicating increased competition and FOMO among investors.
The cryptocurrency venture capital market extended its rebound into the second quarter of the year with founders and investors reporting a more active fundraising environment. Galaxy Research noted that while there was a slight decrease in deal count, capital invested grew to $3.2 billion from $2.5 billion in the first quarter. The median deal size increased and the pre-money valuation surged to near all-time highs, reflecting significant competition and FOMO among investors.
Galaxy highlighted that the correlation between the Bitcoin price and capital invested in crypto startups has broken down, with the latter lagging behind. The success of spot Bitcoin ETFs and regulatory challenges have contributed to this divergence. Despite the increase in capital invested year-to-date, it remains below levels seen in previous years when Bitcoin traded above $60,000.
Early-stage companies received the majority of capital in the second quarter, while later-stage firms faced challenges in raising funds as larger venture capital firms reduced their activity in the sector. However, with the resurgence of liquid crypto, allocators may be considering re-entering the market, potentially leading to more venture capital activity in the second half of the year.
Overall, the report suggests that the rebound in the crypto venture capital market is driven by a resurgent crypto market, increased competition among investors, and the potential return of allocators to the market in the coming months.
