Editor’s note: For more Web3 coverage, visit Crunchbase’s Web3 Tracker, where we track startups, investors and funding news in the Web3, cryptocurrency and blockchain space, powered by Crunchbase’s live, comprehensive data.
Venture funding to crypto and blockchain startups more than doubled in the first quarter as crypto enthusiasts seem ready to embrace easing regulations.
However, the total dollar figures were heavily skewed by a large $2 billion raise by a crypto exchange with ties to White House.
Overall, venture funding to startups in the crypto and blockchain space — also called Web3 for our purposes here — rocketed to $3.8 billion in 220 deals in Q1, per Crunchbase data. The dollar figure represents a 138% jump from the previous quarter, which saw only $1.6 billion go to Web3 startups in 242 deals.
It also represents about twice the amount of cash such startups raised in Q1 2024.
A deeper look
However, before any grand announcements of a crypto rebound are made aloud, a deeper look at the numbers shows that that dollar figure was propped up by one big round.
Last month, cryptocurrency exchange Binance received a massive $2 billion investment from Abu Dhabi-based investment firm MGX. The deal is the single largest investment into a crypto company, beating out FTX’s $1 billion Series B and NYDIG’s $1 billion private equity round in 2021 — both deals raised during the salad days of venture and crypto.
Setting that round aside, Web3 startups raised $1.8 billion last quarter — similar to Q3 and Q4 last year and less than Q2 2024.
Deal flow also continues to shrink, with Q1 seeing fewer than half the number of deals closed during the same quarter a year ago.
That’s not to say there were not some large deals. San Francisco-based Phantom, a crypto wallet startup, raised a $150 million round led by Paradigm and Sequoia Capital that valued the startup at $3 billion, and Paris-based Flowdesk, a crypto-financial service company building a trading infrastructure, raised a $91.8 million venture round.
Rocky market
The new White House has energized the Web3 environment — especially in crypto. President Donald Trump signed an executive order establishing a U.S. strategic bitcoin reserve, and most expect regulation in the crypto industry to ease up substantially under his administration.
However, that has not translated into price jumps in the market. Bitcoin was down 9% in Q1, while Ether tumbled 43%.
Ironically, the White House may also soon have ties to the newly funded Binance, which pleaded guilty to violating anti-money laundering laws in 2023. The same day that round was announced it was reported President Trump’s family may take a financial stake in the company, according to The Wall Street Journal. Also that same day, Bloomberg reported that Trump-linked crypto bank World Liberty Financial is in talks with Binance to launch a dollar-pegged stablecoin.
Despite some starts and stops for Web3 in general and crypto in particular, it seems like there is mounting momentum. Some crypto firms even seem to be ready to jump into the tepid IPO waters. Stablecoin issuer Circle filed this week for an offering, and eToro, which operates a trading platform for stocks, cryptocurrencies and other assets, filed for an IPO last month.
Investors likely will watch those offerings closely as the Web3 sector continues its ups and downs.
Methodology
For Web3 funding numbers, we analyze investments made into VC-backed startups in the cryptocurrency and blockchain industry group.
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Illustration: Dom Guzman
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