- Venture capitalists are eyeing infrastructure plays in crypto.
- Top deal this year is a DeFi cloud platform.
- VCs are sitting on a lot of dry powder for promising projects.
Venture capitalists are expected to invest about $12 billion into crypto projects in 2024, according to estimates by PitchBook.
While the previous bull market saw VCs back application layer startups such as Coinbase, the research firm said this year will see backers return to basics.
“This cycle we haven’t seen any applications getting these large investments,” Robert Le, Pitchbook’s crypto analyst, told DL News.
Instead, VCs are eying infrastructure projects — so-called layer 1s — that support all manner of crypto applications and networks.
Top deal
For instance, the top deal of the first quarter of 2024 went to Together AI, a developer of an open-sourced decentralised cloud platform. In March, it scooped up $106 million in an early-stage round led by Salesforce Ventures.
In the first quarter, VC investments in crypto surged 40%, to $2.4 billion, compared with the prior period.
The focus on infrastructure is one of the reasons Le estimates the industry will raise just 2.4% more this year than the $9.4 billion raised in 2023.
He compared it with infrastructure projects like Amazon Web Services raising proportionally less money than application-level startups such as Uber and Facebook.
That being said, Le said he expects application projects to attract more money as this cycle heats up.
Eric Johansson is DL News’ News Editor. Got a tip? Email at eric@dlnews.com.