March witnessed a significant rebound in venture capital funding for crypto, with a striking month-on-month increase of 53%. Crypto projects, particularly those focused on infrastructure and decentralized finance, attracted a total of $1.16 billion in funding.
Last month, venture capital firms invested more than $1.1 billion across 180 investments, with Optimism’s early-March private token sale emerging as the largest among them.
New data from RootData revealed that March saw a remarkable 180 publicly-announced investments successfully securing funding, marking the highest monthly tally since April 2022.
Around one-fifth of the funding rounds in March were in the $1-3 million range, showing strong interest in early-stage ventures.
Additionally, more than 15% of deals raised between $5-10 million, indicating a significant investment in more established startups.
Despite the United States still leading in the number of funded crypto projects, its dominance slightly decreased, with U.S.-based ventures accounting for less than 10% of the total deal count.
In March, Optimism, a layer-2 scaling solution for Ethereum, stole the spotlight by securing a massive $89 million in private token sales—the largest raise of the month.
Cryptography startup Zama, known for its novel approach to privacy-preserving machine learning, followed closely behind, securing a $73 million Series A funding round.
March witnessed a marked acceleration in venture capital funding for crypto, with a 25% increase in deal number and a 28% increase in total funds raised compared to the previous month of February.
When compared to March 2023, both metrics showed even more impressive growth, with deal numbers surging by over 70% and total funds raised by 28%.
In a recent development, venture capital firms have indicated their investment focus on crypto for the upcoming year. Andreessen Horowitz (a16z) announced on April 1 its allocation of $30 million towards a fund dedicated to Web3 gaming.
Marc Andreessen, co-founder of a16z, and Mike Novogratz’s crypto-focused merchant bank, Galaxy Digital, emerged as major backers of 1kx’s $75 million fund targeting the crypto-based consumer app market.
Meanwhile, Hack VC made headlines in February with its own $150 million fund earmarked for early-stage ventures in both the crypto and AI spheres.
The infrastructure sector emerged as the top draw for crypto VC funding in March, with projects focused on blockchain infrastructure capturing a hefty $283 million, or roughly a quarter of the total $1.16 billion in venture capital investment for the month.
DeFi projects continued to attract a substantial slice of the VC pie in March, raising $228.1 million, or nearly 20% of the total, to fuel their ongoing development and expansion.
Close behind in the funding ranks were centralized finance (CeFi) projects, including exchanges, which scored $85.5 million, or 7% of the total investment. There were no funds raised in the DAO category.
March marked the first time since November that total venture capital funding in the crypto industry surpassed $1 billion for the month.
Following the downturn in 2023 for crypto raises, which ensued after the collapse of FTX in late 2022, the crypto markets were adversely affected.
Monthly gains in VC funding were observed year-to-date, driven by renewed enthusiasm for crypto alongside market recoveries. This resurgence was linked by PitchBook to the introduction of spot Bitcoin exchange-traded funds (ETFs) in the United States.
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