Tech
Venture capital funding in the cryptocurrency sector rises to $2.4 billion, says Pitchbook
(Reuters) – Funding for crypto startups increased for the second consecutive quarter to $2.4 billion in the first three months of 2024, Pitchbook data showed, as expectations of lower interest rates and the debut of the first spot bitcoin ETF in the United States have whetted investors’ appetites.
According to data firm PitchBook, funding was spread across 518 deals and increased 40.3% from the previous quarter. Over the same period, global venture capital investment fell to a nearly five-year low.
Investor bets on digital asset startups are also falling after peaking at more than $10 billion in the first quarter of 2022, hit by economic concerns and the shutdown of major market players. However, historic U.S. regulatory approval of spot bitcoin ETFs, offered by heavyweights BlackRock and Fidelity, bolstered the legitimacy of the asset class and helped send bitcoin to a record high of $73,803 in March.
“The recovery of exchange-traded tokens and continued increases in institutional adoption will spur an increase in VC funding,” said Pitchbook analyst Robert Le.
According to PitchBook, startups focused on building infrastructure for crypto and blockchain technology led the way in funding during the quarter.
The largest deal was made by decentralized cloud platform Together AI, which raised $106 million in a seed round led by Salesforce Ventures that valued the company at $1.1 billion.
“Investment rounds have become highly competitive, especially in the early stages,” said Pitchbook’s Le.
“This is compounded by the fact that early-stage deals are earning higher valuations than late-stage deals, but… we will see if this trend continues in the coming quarters.”
Exits, however, were still low. Le expects mergers to resume later this year, particularly among cryptocurrency exchanges, custodians and infrastructure providers as the market matures.
(Reporting by Medha Singh in Bangalore; Editing by Nivedita Bhattacharjee)