Written by Medha Singh
(Reuters) – Cryptocurrency startups raise funding for the second straight quarter, the first in the first three months of 2024, as hopes for lower interest rates and the arrival of the first U.S. Bitcoin spot ETF fuel investor appetite. It reached $2.4 billion, Pitchbook data showed.
The funds were spread across 518 deals, up 40.3% from the previous quarter, according to data firm Pitchbook. Global venture capital investment fell to its lowest level in about five years during the same period.
Investor bets on digital asset startups have also been on the decline since a peak of more than $10 billion in the first quarter of 2022, hit by economic uncertainty and the closure of major market players. However, the landmark approval from US regulators for the Spot Bitcoin ETF offered by giants BlackRock and Fidelity has increased the legitimacy of the asset class, sending Bitcoin to an all-time high of 7. It reached $3,803.
“A recovery in publicly traded tokens and continued growth in institutional adoption will drive an increase in VC funding,” said PitchBook analyst Robert Lee.
Startups focused on building infrastructure for cryptocurrencies and blockchain technology led the quarter's fundraising, according to PitchBook.
The largest deal came from decentralized cloud platform Together AI, which raised $106 million in an early-stage round led by Salesforce Ventures, valuing the company at $1.1 billion.
“Investment rounds are becoming more competitive, especially in the early stages,” Pitchbook's Lee said.
“The situation is further exacerbated by the fact that early-stage deals are commanding higher valuations than later-stage deals, but we will see if this trend continues over the next few quarters.”
But the exit was still low. Lu expects more mergers, especially among crypto exchanges, custodians, and infrastructure providers, in the second half of this year as the market matures. (This article has been reedited to capitalize 'B' in the PitchBook heading and text)
(Reporting by Medha Singh in Bengaluru; Editing by Nivedita Bhattacharjee)
