Crypto Venture Funding Failed to Accelerate Despite Price Rally

Venture capitalists largely took a cautious approach to crypto last year, despite digital asset prices rising in expectation of Donald Trump’s return to the White House.

Pitchbook data from Feb. 7 shows that Q4 2024 funding rebounded modestly from Q3. However, the year closed at nearly the same level as 2023.

Additionally, Q4 deal value climbed 13.6%, rising from $2.2b to $2.5. In contrast, the number of deals fell 14.6%, dropping from 411 to 351.

The funding rebound shows that investors still back established teams and innovative technologies. However, the drop in deal count reveals growing investor selectivity—a trend that emerged in Q3. Meanwhile, Pitchbook senior analyst Robert Le explained that this shift reflects the crypto market’s normalization, with capital now focusing on fewer, more promising projects.

“Three years ago, anyone could raise capital with a white paper and very little traction,” Le said. “Now, you’re seeing that’s not the case. Any founder going out to raise capital from the market right now has to really show a significant amount or traction or something else other than a technical white paper.”

Stable Deal Flow, Escalating Valuations

For the full year, crypto VC funding reached $10b from 1,940 deals, compared to $10.3b from 1,936 deals in 2023. Moreover, valuations surged across all funding stages in 2024.

Seed-stage valuations jumped 70.2%, rising from $11.8m to $20m. Meanwhile, early-stage figures more than doubled—up 109% from $25m to $52.3m. In contrast, late-stage rounds increased modestly by 3.8%, moving from $43.7m to $45.3m. Overall, median valuations surged 78%, from $18m to $32.1m. This trend shows fierce competition at the earliest stages, especially for infrastructure and decentralized AI startups.

Deal sizes mirrored the surge in valuations. For example, the median check at the seed stage jumped 20%, rising from $2.5m in 2023 to $3m in 2024. Similarly, early-stage medians increased by 26.9%, from $3.8m to $4.8m. Meanwhile, late-stage deal sizes dipped slightly by 1.6%, falling from $6.4m to $6.3m.

Source: Pitchbook

This trend suggests that founders at mature companies prefer smaller, more strategic rounds over larger checks from previous cycles. In addition, this cautious approach reflects uncertain exit conditions, ongoing macroeconomic pressure and a desire to minimize dilution while extending runway.

Crypto Venture Capital Shifts Toward Infrastructure, AI and Strategic Acquisitions

In Q4, investors focused on infrastructure projects that boost scalability, interoperability, and developer tooling. Meanwhile, investment in decentralized AI gained momentum. Since mid-2024, both crypto-native and traditional VCs have shown strong interest in these startups.

In Q4, M&A activity continued, though at a slower pace than in Q2 and Q3. Additionally, deals still included exchanges, custodians and decentralized identity platforms. Meanwhile, strategic buyers targeted complementary capabilities instead of merely absorbing smaller competitors.

In 2024, crypto venture capital investors proved resilient despite macro challenges and shifting US regulations. They pushed seed and early-stage valuations higher by funding promising projects in high-performance blockchains, stablecoins and tokenization.

Conversely, late-stage firms raised smaller rounds to balance growth with caution. Looking ahead, Pitchbook said it expects further consolidation among infrastructure providers, exchanges and custody services. Moreover, investors plan to target next-generation protocols and AI-driven innovations.

Although 2024 funding fell short of previous peaks, steady totals and strong valuations reveal a maturing market. This pattern mirrors trends in other tech sectors that have refined their strategies amid economic uncertainties.

Source: cryptonews.com