Crypto Fundraising Recap: Q3 2024

Crypto Fundraising Levels Hold Steady

The third quarter of 2024 continues to demonstrate stability in the amount of money raised in crypto VC fundraising fluctuating around $1 billion invested each month. Despite the downfall in raises within the third quarter, there is no reason to think that the decline  will continue in the fourth quarter. The number of deals seems to have reached a plateau after the downfall from April’s heights. 

While VC crypto fundraising amounts keep stable, IDO platforms are suffering a deficiency of liquidity. While there is quite a big gap in amounts raised between VC and IDO platforms, the number of projects getting investments remains quite similar, which means that projects on IDO tend to get less funding than startups funded by VC.

Blockchain Services Lead in Fundraising Amounts

Blockchain services received the biggest amount of investments in the third quarter. Perhaps it could indicate a shift towards new protocol types since blockchain services are the most diverse niche in crypto space. 

Blockchain-AI Convergence, Modular Architecture, and DeFi Capture VC Focus

Let’s look at the most notable rounds of Q3 2024 to check the statements above. 

Celestia, pioneering a modular blockchain architecture, soared an impressive $100M round, which should increase blockchain scalability. In the long run this may boost the development of the Celestia ecosystem. 

Sentient, an open-source artificial intelligence development platform, raised $85M led by Peter Thiel’s Founders Fund alongside Pantera Capital and Framework Ventures. Sentient aims to solve an incentive problem, when anyone is able to just copy models without paying for them. 

Story Protocol raised $80 million and reportedly values the company at $2.25B. Story Protocol, a blockchain-based IP network, fights copyright theft by AI using blockchain technology.

Overall, notable projects tend to focus on the merge of blockchain and AI, making DeFi more functional and user-friendly. Another popular category among startups is Modular Solutions, making blockchain technology more efficient.

Top-Tier VCs Ramp Up Investment Activity

Additionally, the presence of funding rounds for projects with already traded tokens, such as Celestia and Drift Protocol, indicates the emergence of a well-established late-stage venture market in cryptocurrency. This development offers opportunities not only for established projects to expand but also for early-stage venture funds to achieve exits.

The third quarter stands out on the most active investors list as two top-tier funds Andreessen Horowitz (a16z) and Binance Labs enter the list of the most active investors. This may indicate the increasing number of good-quality projects on the market as these funds tend to be quite selective. Besides Andreessen Horowitz (a16z) and Binance Labs, other most active VCs are solid Tier 2, which is a positive sign for the market. 

Majority of Investments Target Seed-Stage Startups

Seed rounds are the most popular stage both by the funding amount and number of rounds indicating that the market continues to innovate with new projects. Series A and Strategic stages followed by the funding amount and number of rounds. The existence of later investment rounds is crucial for development of the niche because it allows investors from the earlier stages to make profits and continue to invest in newly arrived early-stage startups. 

Respectively as seed rounds remain the most popular stage, the majority of startups tend to raise between $1-10M. But there are also 11 huge rounds exceeding $50 million, which are usually associated with later investment stages.  

United States Maintains Lead in Crypto Fundraising

While the United States continues to dominate in amounts of money raised in Q3 2024, the second and the third places were unexpectedly held by Australia and Liechtenstein respectively. 

The Bottom Line

Overall, crypto fundraising has remained stable throughout the year. Several factors contribute to this trend, including a lack of new business models among crypto projects, a more subdued bullish sentiment compared to the last cycle, and the absence of a price rally in altcoins. In Q3 2024, blockchain services led in funding raised, highlighting the market's demand for innovative blockchain solutions beyond traditional sectors like DeFi and GameFi. The activity of top-tier VCs suggests the potential emergence of promising new projects in the coming quarters.