In 2024, crypto venture capital faced a downturn, with fewer funds raised but more new funds launched, marking the weakest year since 2020 despite a rise in deal numbers.
A report by Galaxy revealed that the amount of money flowing into venture funds for crypto has been declining each quarter since late 2023. However, 2024 saw an increase in the number of new funds launched.
Overall, 2024 was the weakest year for raising money in the crypto venture capital space since 2020. A total of 79 new funds raised $5.1 billion, marking a significant drop compared to the boom in 2021 and 2022.
Throughout 2024, venture capitalists invested $11.5 billion into crypto and blockchain startups across 2,153 deals. Although the number of new funds saw a slight uptick compared to the previous year, reduced interest from major investors led to smaller fund sizes. Both the median and average sizes of funds in 2024 were the smallest since 2017.
Crypto valuations and venture funding show signs of recovery in 2024
The report revealed the value of crypto startups funded by venture capital saw a sharp increase in mid-2024, particularly in the second and third quarters. These valuations grew more rapidly than those in the broader venture capital industry. However, by the final quarter of 2024, growth slowed, and valuations remained steady compared to the previous quarter.
The year started with low valuations following a steep decline in 2023, when the fourth quarter hit its lowest point since late 2020. The year 2023 was considered a bear market, as Bitcoin struggled to surpass the previous all-time high of over $69,000 reached on November 10, 2021.
The situation began to improve in Q2 2024 as Bitcoin surged to new all-time highs. By the second and third quarters, crypto startup valuations had climbed to their best levels since 2022. This growth mirrored a broader rise across the venture capital industry, but the recovery in crypto was notably stronger.
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The report indicates that in the last quarter of 2024, the median pre-money valuation for crypto deals was $24 million, with an average deal size of $4.5 million.
Projects in the “Web3/NFT/DAO/Metaverse/Gaming” sector attracted the most funding, raising a total of $771.3 million, which accounted for about 20.75% of all crypto venture capital for the quarter. The largest deals included $525 million for Praxis, $42.7 million for Azra Games, and $31 million for Lens.
Throughout the year, at least 10 crypto venture funds raised over $100 million each. Paradigm led with $850 million, followed by Uncorrelated Ventures with $315 million and Bitkraft Ventures with $275 million.
Other significant funds included Accolade Partners at $202 million, Hack VC at $150 million, and ParaFi Capital at $120 million. Galaxy Digital, Golden Ventures, Gate Ventures, and The Blockchain Center in Abu Dhabi each secured $100 million, alongside Borderless Capital.
