Apr 11, 2024 - Economy

VC in crypto ticks up as optimism returns

Data: PitchBook; Chart: Axios Visuals

Crypto venture capitalists appear to be getting their groove back, investing $2.5 billion globally in startups this past quarter, per PitchBook.

Why it matters: Startups need cash to make new things and live another day, and the recent crypto winter hit hard — forcing many to cut headcount and projects.

The big picture: The first quarter haul this year is in line with the year-ago period, but it's a bump better than the previous quarter.

Zoom in: "It went from zero to 100 real fast," Spencer Bogart, a general partner at Blockchain Capital, tells Axios, adding that private markets started heating up late last year.

  • The Grayscale court ruling signaled a spot bitcoin ETF approval, and coaxed investors back in, Framework Ventures' Michael Anderson said.
  • "We have had a slight uptick in the pace of our investments starting Q1 this year as a result of the rising ordinals craze, solana memecoin and the BTC ETF," Jeff Ren, a Hong Kong-based partner at OKX Ventures said via spokesperson.

Between the lines: VCs are investing across stages now, a shift from their defensive crouch in 2023 which saw a focus on smaller rounds for early- to seed-stage companies.

What's trending:

  • AI: The intersection of crypto and artificial intelligence was "the single hottest category" since ChatGPT's debut, but that investment fervor has "mellowed," says Blockchain Capital's Bogart. "People deployed into 2023 with various theses, and none have worked out yet."
  • Social: "They have their moment and dwindle, but even having that moment is interesting," says Bogart. "We don't have much exposure, but we're optimistic." OKX's Ren says: "We want to see social tech realize its disruptive potential."
  • Infrastructure: That's where "everyone is trying to cram in and get access," says Anderson of Framework Ventures. 👉 Case in point: EigenLabs, the developer behind the EigenLayer restaking protocol, snapped up a $100 million round in February; Monad Labs raised $225 million this week. Data availability projects Celestia and Avail are also getting buzz.

What we're watching: Proof-of-personhood projects are the category to watch, according to Bogart and Anderson. They say Worldcoin's potential is underappreciated.

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