Panoramic review of crypto venture capital in 2024: Infrastructure project financing is active, fund raising is weak

Author: insights4.vc

Compiled by: Felix, PANews

The crypto market experienced significant growth in 2024, driven by key milestones such as the launch of a spot Bitcoin ETF in January and the election of a pro-crypto U.S. president and Congress in November. The market value of liquid cryptocurrencies soared by US$1.6 trillion (a year-on-year increase of 88%), reaching US$3.4 trillion at the end of the year. Among them, the market value of Bitcoin increased by nearly US$1 trillion, and the market value at the end of the year was close to US$2 trillion. Bitcoin's rise accounted for 62% of the market's total gain, and was also fueled by the craze for memecoin and AI tokens, which dominated on-chain activity, especially Solana.

Despite the market recovery, the crypto venture space remains challenging. Major trends such as Bitcoin, memecoin, and AI agent tokens offer limited venture capital opportunities as they primarily leverage existing on-chain infrastructure. Once popular areas such as DeFi, gaming, the Metaverse, and NFTs have failed to attract much new attention or capital. Now largely mature infrastructure companies face growing competition from traditional financial services intermediaries in anticipation of regulatory reforms from the new U.S. administration.

Emerging trends such as stablecoins, tokenization, DeFi-TradFi integration, and the crypto-AI intersection show promise but are still in their infancy. At the same time, macroeconomic pressures, including high interest rates, have disproportionately impacted the crypto venture industry by discouraging high-risk allocations. In the wake of the high-profile crypto market crash in 2022, integrated VC firms have mostly remained cautious and stayed away from the crypto market.

According to Galaxy Research data, venture investors invested $3.5 billion in cryptocurrency and blockchain-focused startups in the fourth quarter of 2024, a 46% quarter-on-quarter increase. However, the number of transactions fell 13% month-on-month to 416.

 Crypto Venture Capital Investments by Year (2016-2024)

Throughout 2024, venture capital investments in cryptocurrency and blockchain startups totaled $11.5 billion across 2,153 deals.

According to PitchBook's "Enterprise Technology Outlook 2025," senior analyst Robert Le predicts that annual investment in the crypto market will exceed $18 billion by 2025, with multiple quarters exceeding $5 billion. This is a significant increase compared with 2024, but is still significantly lower than the levels in 2021 and 2022.

The increasing institutionalization of Bitcoin, the rise of stablecoins, and potential regulatory developments for DeFi-TradFi integration are all key areas for future innovation. These factors, combined with emerging trends, could fuel a resurgence in venture capital activity.

Capital Investment and Bitcoin Price

Historically, there has been a strong correlation between the price of Bitcoin and the amount of capital invested in crypto startups. However, since January 2023, this correlation has weakened significantly. Bitcoin hits all-time highs while venture capital activity struggles to keep pace.

Possible explanation:

• Weak allocation interest: Institutional investors may be hesitant due to regulatory uncertainty and market volatility
• Shifting Market Narrative: The current market narrative favors Bitcoin, potentially overshadowing other crypto investment opportunities
• Venture Capital Outlook: The broader venture capital market is experiencing a downturn, affecting crypto investing.

Infrastructure track dominates crypto venture capital

Total financing by each track in 2024 (USD)

According to data from The Block, infrastructure dominated crypto venture capital investment in 2024, attracting more than 610 transactions and reaching $5.5 billion, a year-on-year increase of 57%. The investment focuses on expanding blockchain networks through L2 solutions to increase speed, reduce costs and scalability. Modular technologies including data availability, shared orderers received significant funding, while liquidity staking protocols and developer tools remain key priorities.

NFT and gaming startups raised $2.5 billion, slightly up from $2.2 billion in 2023. Despite steady funding, NFT market activity has declined as memecoins gain traction. While transaction activity has matured since a peak of 936 transactions in 2022, NFTs and gaming remain the focus, with over 610 transactions. Enterprise blockchain financing has dropped significantly, down 69% year-on-year, from $536 million in 2023 to $164 million.

Web3 funding has shown some resilience, raising $3.3 billion in the past two years, close to the $3.4 billion raised in 2021-2022. Growth is driven by emerging trends such as SocialFi, CryptoAI, and DePIN. DePIN became a fast-growing vertical, attracting more than 260 deals and nearly $1 billion in funding.

DeFi experienced a strong recovery in 2024, reaching more than 530 financings compared to 287 financings in 2023 (an increase of 85% year-on-year). Bitcoin-based DeFi use cases, including stablecoins, lending protocols and perpetual protocols, are a key driver of this growth.

 Crypto Venture Capital Investments by Type

The chart above shows that, with the exception of undisclosed rounds, the crypto industry remains highly concentrated in early-stage funding rounds. Early-stage deals attracted the majority of capital investment, accounting for 60%, while later-stage financing accounted for 40% of total capital, a significant increase from 15% in the third quarter.

most active investors

In 2024, Animoca Brands led venture capital activity with more than 100 investments; followed by OKX Ventures with more than 80 investments; Cogigent Ventures, Binance Labs, and Foresight Ventures each completed about 60 investments; while The Spartan Group, Big Brain Holdings, and Robot Ventures has completed over 50 investments; major players such as Polychain Capital and Amber Group have maintained over 40 investment activity.

venture capital fund

Among angel investors, the most active one is Sandeep Nailwal (Founder of Polygon), who has participated in more than 40 investments; followed by Paul Taylor and DCF God, who have each participated in more than 30 investments; Anatoly Yakovenko (Founder of Solana); Santiago R . Santos and Balaji Srinivasan are also important players, completing over 25 investments; Mert Mumtaz lags slightly behind, but is still active.

 angel investor

Crypto Venture Financing

According to data from the "Venture Capital Journal", venture capital fund fundraising dropped to the lowest level in six years in 2024, with 865 funds raising a total of US$104.7 billion, compared with 1,029 funds raising US$128 billion in 2023 The dollar fell sharply by 18%.

Crypto risk financing remains under pressure due to macroeconomic and ongoing market volatility in 2022-2023. Allocators reduced their commitments to crypto venture capital funds, reflecting a shift from the bullish sentiment seen in 2021 and early 2022. Although interest rate cuts were expected in 2024, meaningful cuts did not occur until the second half of the year, and venture fund capital allocations have continued to decline quarter-on-quarter since the third quarter of 2023.

 Crypto venture financing situation from 2017 to 2024

Financing for crypto venture capital funds was noticeably softer in 2024, with 79 new funds raising $5.1 billion, the lowest annual total since 2020. Although the number of new funds increased slightly year-on-year, reduced allocator interest led to a significant reduction in fund size. Both the median and average fund size in 2024 fell to their lowest levels since 2017, highlighting the increasingly challenging financing environment.

Shift to mid-cap funds

Historically, small funds (under $100 million) have dominated crypto venture capital funding, reflecting the early stages of the crypto industry. However, since 2018, there has been a clear shift in trends for mid-cap funds ($100 million to $500 million).

While large funds ($1 billion or more) experienced rapid growth between 2019 and 2022, they were not present in 2023 and 2024 due to the following challenges:

• Difficulties in deployment: A limited number of startups require large amounts of capital
• Valuation risk: Large investments drive up valuations and increase risks

Despite this, well-known funds such as Pantera Capital and Standard Crypto ($500 million) have remained active, expanding their reach to cover areas beyond cryptocurrencies, such as AI. It is worth noting that Pantera Fund V is the successor to Pantera Blockchain Fund IV and will raise funds for the first time on July 1, 2025, with a target of $1 billion.

The table below summarizes the 10 funds raising more than $100 million in 2024. The largest closed-end fund in 2024 is Fund III managed by Paradigm.

 Crypto venture capital fund to raise over $100 million in 2024

Investments to watch in 2024

 Top 10 venture capital projects in 2024

• Monad: EVM-compatible L1 blockchain that achieves a throughput of 10,000 transactions per second, with 1-second block time and single-slot finality. Its parallel transaction execution architecture ensures efficiency, making it the first choice for developers seeking speed and scalability.

• Farcaster: A social network that empowers users to control their data. Its “fully decentralized” design allows interactions without network-wide approval, using a non-custodial social graph secured by Ethereum. Flagship app Warpcast highlights its potential to redefine social media.

• Berachain’s Proof of Liquidity (PoL) consensus connects network security to liquidity provision, allowing validators to stake liquid assets for enhanced security while earning rewards. EVM compatibility simplifies the deployment of DeFi applications and consolidates Berachain's role in the DeFi ecosystem.

• Story Protocol: Transforming intellectual property management with on-chain registration, automated licensing, and account monetization via token-bound accounts that support ERC-6551. Give creators control and foster innovation with the Ethereum Virtual Machine and Cosmos SDK.

• 0G Labs: Combining blockchain scalability with AI-driven processes, with a powerful data availability layer and decentralized AI operating system (dAIOS). It leads the 2024 project financing record with $250 million in financing, surpassing Monad and consolidating its dominance in the AI-blockchain field.

• Polymarket: A decentralized prediction market that gained a lot of attention during the 2024 US presidential election, demonstrating the potential for rapid adoption of Web3 despite declining post-event metrics.

Blockchain infrastructure

• EigenLayer: Introducing a re-pledge market to maximize the use of Ethereum's pledged assets and improve security and verifier income.
• Babylon: Combining Bitcoin’s proof-of-work with a proof-of-stake blockchain to provide tamper-proof security and cross-chain interoperability.

Blockchain services

• Sentient: Enables decentralized AI applications by leveraging blockchain’s distributed network for scalable and private AI computing.
• Zama: Implementing homomorphic encryption for secure data processing on the blockchain, ensuring privacy without sacrificing functionality.

Key trends in 2024 and beyond

AI integration, DeFi on Bitcoin, and dedicated blockchains dominate the blockchain space. Projects like 0G Labs and Sentient are leading the way in AI, while Babylon is strengthening Bitcoin's role in DeFi. In the near future, Monad, Berachain, and Story Protocol are expected to launch their mainnets.

in conclusion

The 2024 crypto venture capital landscape shows cautious optimism, characterized by a rebound in funding activity and growing institutional interest. The shift toward mid-cap funds and the continued dominance of emerging funds suggests that the industry is maturing and adapting to changing market dynamics. Despite a near-term decline in venture capital and longer funding cycles, the continued focus on early-stage venture capital and emerging trends such as AI integration highlight a resilient ecosystem that is poised for future growth. Overall, the crypto industry is showing underlying strength, suggesting that new momentum may be on the horizon.

Related reading: 2024 Financing Report: 1,259 financings, US$9.615 billion, the overall market trend is similar to last year