Crypto infrastructure projects dominated venture capital funding, securing a total of $685 million in new investments during Q2.
Crypto startups saw a slight increase in venture capital funding in Q2, even as the number of deals dropped, according to Pitchbook data.
An Aug. 9 report from Pitchbook revealed a 2.5% uptick in total invested capital, despite a 12.5% decline in deal volume compared to Q1. This trend suggests growing confidence among institutional investors in the crypto market.
Pitchbook stated, “With investor sentiment improving and assuming no major market disruptions, we anticipate investment activity will continue to accelerate throughout the year.”
The report highlighted that infrastructure projects dominated Q2 funding. Notable deals included Monad, a layer-1 platform, raising $225 million in Series A funding, DeFi protocol BeraChain securing $100 million in Series B, and Bitcoin restaking platform Babylon attracting $70 million in early-stage funding.
Two “mega-rounds” also stood out: decentralized social media protocol Farcaster raised $150 million in a Series A at a $1 billion valuation, and blockchain gaming platform Zentry pulled in $140 million in early-stage funding.
However, the pace of funding for crypto startups has significantly slowed over the last 18 months compared to 2021 and 2022, which saw $25.3 billion and $29.4 billion raised, respectively. In 2023, total investment reached $10.1 billion, with projections pointing to $10.8 billion by year-end.
The report also noted increased competition at earlier fundraising stages, while later-stage rounds have become less competitive.
According to DefiLlama, over $102 billion has flowed into the blockchain industry across 5,400 funding rounds since June 2014.
This report comes shortly after venture capital firms Pantera Capital and Paradigm announced efforts to raise $1 billion and $850 million, respectively, for new crypto funds. A $1 billion raise from Pantera would mark the largest for the crypto industry since May 2022, when Andreessen Horowitz (a16z) raised a record $4.5 billion. In May, a16z announced it had raised $7.2 billion to invest in various tech sectors, including AI and gaming, though it chose not to increase its crypto-focused fund.