In the second quarter, the crypto industry attracted $3.2 billion in venture capital against the previous period's figure of $2.5 billion — an increase of 28%. This follows from the Galaxy Digital study.
Data: Galaxy Digital.The number of transactions decreased slightly from 603 to 577 (minus 4%), but their median amount increased from $3 million to $3.2 million.
"The long—term correlation between the price of bitcoin and investments in crypto startups has broken down — the exchange rate has increased significantly since January 2023, while venture capital activity has hardly kept up with it," Galaxy experts noted.
Despite the increase in investment volumes since the beginning of the year, they remain well below the levels of 2021-2022, when digital gold was trading above $60,000 for the first time.
Data: Galaxy Digital.Experts attributed such a noticeable divergence of trends to the emergence of other ways of investing in the industry that are attractive to investors, such as bitcoin ETFs or restaking, as well as a series of bankruptcies in the industry and macroeconomic factors.
Almost 80% of investments in the quarter were at early stages and only 20% of financing was received by more mature projects. Galaxy explained this gap by the departure of many general venture funds from the industry. This has made it more difficult for already operating startups to raise capital.
In terms of categories, venture investors were most interested in projects combined by experts in the category "Web3/NFT/DAO/Metaverse/Gaming" — $758 million or 24% of the total. The two largest deals in these areas were concluded by Farcaster and Zentry, which raised $150 million and $140 million, respectively.
Data: Galaxy Digital.This is followed by infrastructure-oriented projects (15%), trading (12%) and first-level blockchains (12%). Monad and Berachain provided a six-fold increase in the share of the latter category from $225 million and $100 million, respectively.
Experts drew attention to the indicators of L2 solutions based on bitcoin. Investments in them increased by 174% quarter-on-quarter and reached almost $95 million.
By geographical distribution, more than 40% of venture capital transactions in the second quarter were made by startups based in the United States. They accounted for 53% of the total amount of funds raised. Companies with headquarters in the UK have corresponding figures of 10% and 12.78%.
One of the features of the quarter was a sharp jump in the preliminary valuation of startups. The median figure rose from $19 million to $34 million, approaching historical highs.
During the period, companies founded in 2021-2023 absolutely dominated in attracting financing.
Galaxy experts have concluded that the mood of venture investors is improving. If trends continue, the current year may become the third in terms of attracted capital after the favorable years for the industry in 2021 and 2022, they predicted.
Recall that analysts of the DeFi Llama service estimated that since May 2014, crypto startups have received a total of $101.4 billion in venture financing.