Crypto startup funding reached USD 2.4 billion in Q1 2024, a 40.3% increase from Q4, driven by lower interest rate expectations and the first US bitcoin spot ETF, while global VC investments hit a near five-year low.
Investor bets on digital asset startups too have been on a slide since the peak of over USD 10 billion in the first quarter of 2022, hurt by economic worries and the shutdown of key market players. However, the landmark US regulatory approval of spot bitcoin ETFs, which are offered by heavyweights BlackRock and Fidelity, boosted the legitimacy of the asset class and helped send bitcoin to a record high of USD 73,803 in March 2024.
Startups focused on building infrastructure for crypto and blockchain technology led the way in funding during the quarter, according to PitchBook. One of the largest deals was made by decentralised cloud platform Together AI, which raised USD 106 million in an early-stage round led by Salesforce Ventures that valued the company at USD 1.1 billion.
Analysts from PitchBook say the investment rounds have become highly competitive, especially at the early stages. This is compounded by the fact that early-stage deals are earning higher valuations than late-stage deals but, they will see if this trend holds in the coming quarters. Exits were still low, though. PitchBook expects mergers to pick up later in 2024, particularly among crypto exchanges, custodians, and infrastructure providers as the market matures.
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