Crypto fundraising hits five-year low, investors pivots toward AI and payments infrastructure

January is on track to end with just 67 crypto fundraising rounds, the lowest level in five years. While the rounds are larger, crypto companies are already reporting difficulties with raises. 

VC funding shrank in January based on the number of completed rounds. With just 67 deals, January’s performance sank to a five-year low. VC deals returned to levels not seen since before the 2021 bull market. The number of deals was even smaller than the slow months of the 2022-2023 period. 

YziLabs was the leading fund in January, leading four rounds, followed by Coinbase Ventures with three funding rounds. 

Animoca Brands, previously highly active in Web3, saw a significant outflow of activity, but also closed three rounds in the past month. 

Not all funding rounds were reported as of January 30, but overall, the slowdown trend has extended for the past 12 months. Funding follows general crypto performance and optimism, and currently signals an outflow of activity. Funding activity is lower than average, with the biggest round for the past 30 days at $250M. 

Crypto funding switched to AI 

Funding rounds for AI projects have been the leading sector for the past month. Payments are also a growing subset, based on the ongoing adoption of stablecoins and fintech features in crypto wallets. 

Binance Alpha tokens remain one of the main venues for exposure and fundraising, followed by RWA projects. 

Fundraising has abandoned most retail-oriented Web3 features, instead turning to crypto platforms primarily as infrastructure. DeFi and blockchain services remained some of the most well-funded sectors. 

The most numerous rounds were limited to the $3M – $10M category, with 10 rounds valued at over $10M. There was a significant divergence between seed rounds, with a larger number but smaller liquidity, and several undisclosed rounds with significant allocations. Only three funding rounds were directly supplied by angel investors. 

Talos reached the biggest valuation of $1.5B, though based on a raise of just $45M. RAIN had the biggest and most widely acclaimed round for $250M. 

Token sales also slow down

Token sales in the form of IDO or ICO also slowed down, after a few months where direct token sales were livelier than VC raises. 

In January, only 37 token sales were reported, raising $116.9M. The market has shown signs of failing to absorb the proposed token unlocks, and demand for new project tokens was slow due to the lack of an altcoin season. Unlike previous cycles, new projects did not have a high profile and were only listed based on special exchange programs. 

Solana emerged as the most active chain for new raises in the past year, but came in second this January. Ethereum attracted the most IDO rounds in the past month, followed by BNB Chain. Binance Wallet was the platform with the highest return in January, followed by MEXC token sales. Projects are rarely deployed on Base, with only five rounds in January.

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