In the fourth quarter of 2024, the number of VC investments in the crypto sector dropped significantly, but volumes increased.
This in fact indicates that investors are becoming more selective in the allocation of their funds, but also that they are significantly optimistic about the future.
VC investments in crypto in 2024
These data were published in the report Crypto VC Trends from last week, drafted by PitchBook.
The report presents the data for the fourth quarter (Q4) of 2024.
In summary, the document states that there are still strong signals for the cryptocurrency sector, after a flat year, and that cryptocurrencies are “on the mend” in the fourth quarter.
In particular, the value of the agreements increased by 13.6% on a quarterly basis, reaching 2.5 billion dollars, generated by 351 agreements.
According to the latest Emerging Tech Research by PitchBook, investors are making larger bets on some selected startups with skyrocketing valuation figures, so much so that the average pre-money valuation for the early stage has jumped by 70.2% year over year.
They write:
“Investors are optimistic. This report explains the types of startups they are supporting and the prospects for 2025”.
VC crypto: the improvement of the quality of investments
To the above data, the report also adds another one that describes a more complex, and substantially better, scenario.
In fact, Crypto VC deals decreased by 46% from the first to the fourth quarter, while the value of investments bounced back in the fourth quarter.
This in fact signals a shift towards selective and high-value projects.
It is also necessary to specify that these are still million-dollar investments.
The average per agreement ranges from 3 million dollars for those in the early-stage phase to 6.3 million for those in the late-stage phase, while the average pre-money valuation ranges from 20 million dollars for those in the pre-seed phase to 52.3 million for those in the early-stage phase.
If in the first quarter of last year there were as many as 653 agreements, in the last one they had dropped to 351. The reduction, therefore, was sharp, and this clearly reveals that the VCs have started to raise the requirements for the selection of crypto projects to invest in.
The rebound of the dato
Substantially, during 2024 there was a decline in this specific sector, but with a final recovery in the fourth quarter set in a much more attentive and mature context.
In fact, the total volume of overall crypto investments by VCs in the first quarter of 2024 was 2.7 billion dollars, with a sharp decline to 2.2 billion in Q3. However, in Q4, despite the strong drop in the number of investments, the overall volume bounced back to 2.6 billion dollars.
In the end, the overall activity of 2024 was similar to that of 2023, but with a change in approach.
The report states that investors remain willing to support established teams and differentiated technologies, but with increasing selectivity from VC funds. This dynamic became evident for the first time only in the third quarter of last year.
The most sought-after sectors
The crypto sector with the most VC fund investments in the fourth quarter of 2024 turned out to be Web3, which includes decentralized communities, metaverse, gaming, NFT platforms, and crypto projects integrated with artificial intelligence.
Out of 2.6 billion dollars invested, Web3 attracted more than 800 million, led by the utopian crypto-friendly city Praxis with as much as 525 million dollars
The second crypto sector by VC investment volumes turned out to be that of access, meaning projects that aim to improve access to the crypto and blockchain world, or that work to attract new users.
However, it stopped at 400 million.
The other three sectors, DeFi, Blockchain networks, and Infrastructure & developer tools, remained below 250 million, with DeFi even below 200 million.
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The greater maturity
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If you compare these data with those from just five years ago, you realize that the crypto sector has really matured a lot in a very short time.
However, it is not yet fully mature.
Indeed, if instead of focusing on the activity of VCs or projects developing new applications, one shifts to the activity of retail in the crypto markets, it is discovered that true maturity is still very far away.
Practically on one side, there has been a rapid and significant maturation by operators and large investors in recent years, thanks in part to ETFs, while on the other side, the maturation of end users is still proceeding very slowly.
As often happens, companies notice trends and react to them long before ordinary citizens.
