Crypto startups raised $2,7 billion in Q2

What’s new? Venture capital funding for crypto startups rose by 2,5% during the quarter to $2,7 billion, but the number of deals fell by 12,5%. In general, conditions in the crypto market became more difficult after the first quarter, when the rates of many assets hit an all-time high amid the excitement around spot bitcoin exchange-traded funds (ETFs). Bloomberg estimates inflows into ETFs totaled $2,8 billion in Q2, down 80% from $13,7 billion in Q1.

Material by Bloomberg

What else is known? In addition, the Q2 financial result is 9,8% below the same period last year. As Rob Hadick, a general partner at crypto venture capital fund Dragonfly, clarifies, venture capital investment in crypto startups is still below the highs of 2021 and early 2022, but it reached a local peak in March and April.

Funding for later-stage startups remained weak, and as the market turned around in April and May, the flow of venture capital investment slowed again, Hadick added.

For his part, PitchBook senior analyst Robert Le noted that venture capital investment grew for the third consecutive quarter, and the overall market recovery and continued institutional adoption of cryptocurrencies this year indicate that the figure will only increase.

Barnes & Thornburg: US private investors predict a surge in crypto investments

The main reason experts call the entry of institutional investors into the crypto market and the approval of crypto ETFs

Read more

Investments were again focused on infrastructure projects such as new blockchains, with venture capitalists still suspicious of consumer-oriented applications.

For example, blockchain startup MegaETH raised $20 million in a seed round in June. Co-founder Shuyao Kong said the fundraising followed strong market demand for high-performance networks. The only major crypto app funding round last quarter was the social platform Farcaster, which raised $150 million in May.

At the same time, exit activity — the process by which investors realize a return on their investment by selling stakes in a company — reached its highest level since Q1, 2022. There were 26 exits during the reporting period, including the sale of crypto exchange Bitstamp by fintech company Ripple to online broker Robinhood. PitchBook expects that exit activities could extend through the end of the year.

Crypto community has reported that Ripple has sold its stake in payment company Tranglo

Tranglo uses Ripple’s XRP token and On-Demand Liquidity (ODL) service to make international payments

Read more

“We expect more consolidation among crypto exchanges, custodians, and infrastructure providers as the market matures and smaller players seek strategic exits,” the PitchBook report says.

Earlier, analyst Colin Wu estimated that in July, venture capital funding for crypto projects rose by 38% month-over-month (to $1,02 billion) and the number of rounds increased by 12% (to 111).

DeFi, Web 3.0, and NFT/gaming categories accounted for the largest number of rounds. Meanwhile, the top investors were Australian miner Iris Energy, which raised $413,4 million through an equity issue, US-based miner Riot, which bought Block Mining for $92,5 million, and AI platform Sentient, which raised $85 million led by Peter Thiel’s Founders Fund and Pantera Capital.