1. Crypto startups funding grows by 2.5% in Q2
2. Shifts in funding rounds according to Pitchbook
3. Impact of major players and key investments

According to the latest Pitchbook report, crypto startups raised more venture capital in Q2 this year despite a decline in the number of deals.

Crypto startups funding grows by 2.5% in Q2

Pitchbook’s emerging technology research revealed that crypto startup deals declined by 12.5%, while venture capital funding rose by 2.5%. In an August 9 report, the analyst stated that the increased funding could mean positive investor sentiment returning to the market. Pitchbook highlighted that the increased funding suggested that investors are more focused on the long-term benefits of blockchain technology than short-term profits. The report also indicated that venture funding could surpass the $10.8 billion mark if the trend continues into Q3 and Q4.

Shifts in funding rounds according to Pitchbook

The report noted that compared to 2023, valuations were higher at the seed and early stages and relatively lower for the late stage. Pitchbook specified that the pre-money valuation at the seed stage was $23 million, while the early stage was $63.8 million. The later stage recorded a pre-money valuation of $23 million, a 36% decline from 2023. The analysis suggested the valuation numbers indicate that investment rounds had become more competitive in the earlier stages in line with the broader venture market. Pitchbook emphasized in the report that crypto startup funding has consistently slowed down since the market peak in 2021 and 2022. The report highlighted that the market peak saw over $29 billion in investments in crypto firms. In 2023, the total capital raised amounted to $10.1 billion.

Impact of major players and key investments

Pitchbook's report also noted that infrastructure projects dominated most funding in Q2. Such projects included the Layer 1 platform Monad, designed to improve ETH’s scalability, and the DeFi-specific Layer 1 platform Berachain, designed to improve Bitcoin’s use case as collateral. Babylon, a Bitcoin staking platform, was also a notable venture capital fundraiser in Q2. Decentralized social media and gaming platforms were among the biggest fundraisers in Q2. The decentralized social media protocol Farcaster raised $150 million in a Series A round, while Zentry, a Blockchain-based gaming platform, raised $140 million.

Pitchbook's report highlighted that despite the overall decrease in the number of deals, the venture capital raised continues to grow, indicating returning investor optimism towards crypto markets. If the current trends continue, the total venture capital raised may reach new heights.