The year closes with 16% more crypto VC deals, investment value still 20% lower

VC funding for crypto startups continued its recovery throughout the year. The past 12 months end with 16% more deals, though at a lower overall value. 

Funding for crypto projects expanded in 2024 in terms of the total number of deals. With growing technological stacks, more projects emerged as potentially successful narratives. Competition also picked up, as the market refilled with liquidity. 

The profile of investments also shifted in the past year, to reflect the new set of narratives in the bull market. Based on Messari’s report, L1 and infrastructure closed the biggest deals. DePin spending rose by 300% as projects offered new infrastructure and physical AI data centers or shared resources. AI was the other significant growth area, doubling the inflow of VC investments. 

While crypto prices and projects have recovered some of their metrics, VC funding is still pressured by the 2022-2023 slowdown. The biggest worry is the ability of funds to achieve a favorable price after launching their token. Teams have been more careful about their vesting and incentives, to avoid the fate of former VC-backed tokens that erased most of their value after the launch.

Final quarter boosted overall deals for the year

The final months of 2024 added to the overall success, with a 22.6% monthly growth, based on Messari’s accounting of crypto deals. Crypto funding ended Q3 with around $2.4B in deals, with some strong months carried by large-scale rounds. From October onward, more deals were announced, compensating for the slowdown in the summer months.

The last quarter of 2024 is preparing to wrap up with similar results, though with a notably higher number of deals. VC deals tracked the bull market, recovering after the slow September growth. VC funding has returned to the levels of 2022, before the prolonged bear market, with expectations of sufficient liquidity and an upward trend in 2025. 

One of the big drivers in 2024 were private deals and funding rounds, often financed with bonds instead of crypto treasuries. Funds were more selective in their spending, as some VC projects faced challenges in successfully trading their tokens. 

The overall trend of growing VC funding also put Animoca Brands as the leader in supporting most projects. Animoca Brands also worked as a curator, singling out promising projects with rounds of $3M-$10M. 

Beyond the small high-profile rounds, projects received $7.07B in undisclosed rounds. Those rounds exceeded both the number and value of seed rounds, as funds became more careful of their selection with early-stage startups. 

Most of the funding flowed into US-based projects. Crypto startups had several major sources of funding, ranging from older crypto investors and former ICO projects to outsider buyers. 

VC funding growth in the last months of 2024 also coincided with a revival of ICO deals. As in the past, some of the projects combined a public sale with VC backing. ICO deals accelerated in the past quarter of 2024, achieving a total of 555 deals on Ethereum and 250 sales on Solana. As a comparison, Ethereum saw only 260 ICO deals in 2023 during the bear market stagnation, and Solana had a negligible number of sales. 

AI deals move to the forefront

The pace of AI deals in the crypto space tracks the expansion of AI spending for all other startups. In the year to date, AI investments for mainstream startups expanded to $87B, up from $56B in 2023, and with an outlook of additional growth in the next year. 

In the crypto space, the share of AI deals rose to 26.8% of all fundraising. AI projects are constantly cropping up, and some older crypto startups are adding AI to their name. Overall, the funding tracks the newest use cases for AI, ranging from real infrastructure and decentralized computing to meme tokens and content production. 

The AI category is especially driven by VC funding, but not reflected in ICO rounds. Most ICO sales target an older set of narratives, including DeFi, GameFi, blockchain infrastructure and services. AI projects raise capital either through funds, or choose to launch a meme token to tap the wider public interest.

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