Web3 Investment Surges by 55% in Q1 with Crypto VC Interest Rebounding

The first quarter of 2024 witnessed a remarkable 55% surge in total investment in Web3 firms, marking a resurgence of venture capital (VC) interest in the crypto space.

Not only did the total investment spike, but the number of VC deals in the Web3 sector also saw a significant uptick of 36% compared to the previous quarter, according to a Q1 on-chain report jointly conducted by QuickNode and Artemis.

Predominantly, investments poured into Web3 protocols related to artificial intelligence (AI) and gaming, reflecting a positive shift in VC sentiment towards Web3. The report highlights:

“[This indicates] that investments are increasing for the first time in over a year, and suggesting a favorable shift in VC sentiment for web3. In particular, AI and Gaming have garnered the most resounding revival of venture capital enthusiasm among the categories.”

Illustrating the VC community’s keen interest in Web3, Paradigm, a crypto-focused VC firm, led a $225 million funding round for Monad Labs, a company developing a new layer-1 blockchain network poised to compete with Solana. This funding round was announced on April 9th.

Among the standout early-stage investment rounds of the quarter were a $42 million Series B funding for Berachain and a $35 million pre-seed round for 0G Labs, a blockchain specializing in data availability for AI protocols.

Seed rounds witnessed the most substantial growth, soaring by 53% quarter-on-quarter, indicating a heightened interest in early-stage investments. Series A and seed funding rounds nearly doubled their capital inflows compared to the previous quarter, showcasing VC’s renewed appetite for Web3 investments, as outlined in the report.

Crypto VC Interest Surges Ahead of Bitcoin Halving Several notable investment deals surfaced in the period leading up to the 2024 Bitcoin halving event.

On April 9th, Mezo, a Bitcoin layer-2 network, disclosed the completion of a $21 million Series A funding round led by Pantera Capital. Mezo offers investors the opportunity to earn yield based on their token holding duration, positioning itself as a “Bitcoin Economic Layer.”

Reports emerged on April 3rd regarding Paradigm’s discussions to raise up to $850 million for a new fund, potentially marking the largest raise in the crypto industry since May 2022, when Andreessen Horowitz, a Silicon Valley-based VC firm, secured a record-setting $4.5 billion.