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Crypto-focused venture capital firms are struggling to raise funds despite the bullish crypto markets, according to the latest report from Galaxy Digital Research. The report, which examines crypto VC fundraising and the number of new funds, shows that there were only eight new funds in Q3 of 2024, and they raised a combined $140 million, the lowest since Q3 of 2020. According to the report, the decline in capital allocation to crypto VC continues a trend that started in Q3 of 2023. Since then, the allocation has been falling quarter on quarter (QoQ) to its current level. The report attributed this to events in 2022 and 2023, which caused many investors to withdraw from the crypto sector. It said: “The macro environment and turmoil in the crypto market from 2022 and 2023 has combined to dissuade some allocators from making the same level of commitments to crypto venture investors that they did in 2021 and early 2022.” With the continuous decline in capital allocation, this could become the worst year for crypto VC in terms of fundraising since 2020. So far, 39 new funds have raised just $1.91 billion, and most of the VCs have raised smaller capital. The average and median fund sizes in 2024 are the lowest since 2017. VC investments into crypto companies fall 20% in Q3 2024 Meanwhile, just as fewer new VC funds focus on crypto, existing VCs have also pulled back on their crypto investments. In the third quarter of 2024, VCs invested only $2.4 billion into blockchain and crypto startups across 478 deals. This represents a 20% QoQ decline in value and a 17% fall in the number of deals. VC crypto deals fell in Q3 (Source: Galaxy Research) As the report noted, a continuation of this trend could see 2024 end at…

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Filed under: News - @ October 15, 2024 10:22 pm