- The 28% increase in crypto VC funding is a far cry from the bull rallies of years ago.
- Galaxy analysts said sentiment is rising, and pointed to sectors that have seen the most interest.
Venture capitalists are still piling billions into crypto, according to a report from Galaxy Digital published on Wednesday.
Crypto startups raised $3.2 billion in the second quarter, a 28% increase from the $2.5 billion raised in the first quarter.
While that’s still a far cry from the almost $10 billion in money invested in crypto projects in the second quarter of 2022, “the crypto venture capital sentiment continues to improve,” wrote Alex Thorn, head of Galaxy Digital’s research, and Gabe Parker, a research analyst, in the report.
The rebound in VC interest in crypto continues the trend seen in the beginning of the year, which mirrors the rise in crypto prices.
But while Bitcoin hit an all-time high in March, crypto VCs haven’t matched the broader market’s enthusiasm, especially as Silicon Valley continues to buzz on about AI.
Web3, layer 1s, and Bitcoin layer 2s
As part of the $3.2 billion they invested in crypto, investors predominantly focused on web3 projects.
Startups that dealt with web3, DAOs, or decentralised autonomous organisations, the metaverse, and gaming netted 24% of VC capital, or $758 million.
The $150 million raise for Farcaster, a social media protocol, was the largest of the category.
Layer 1s and Bitcoin layer 2s also attracted significant capital, according to Galaxy Digital.
The $225 million raise for Monad Labs, which aims to build a faster version of Ethereum that’s compatible with Etheruem’s coding language, was the largest round of the quarter.
Berachain, another layer 1, raised $100 million at a valuation of $1.5 billion, according to Bloomberg.
And Bitcoin layer 2s, or blockchains built on top of Bitcoin’s that aim to process transactions more efficiently, also saw increased investor interest.
These new protocols raised almost $95 million, a 174% increase from the first quarter.
In total, Galaxy Digital counted 577 crypto deals in the second quarter, with early-stage deals netting almost 80% of total funding.
Ben Weiss is a Dubai Correspondent at DL News. Got a tip? Email him at bweiss@dlnews.com.