whether we like it or not Venture capitalists are key contributors to the growth of the crypto Market the problem is there doesn’t seem to be much VC activity going on at the moment and the crypto Market is starting to feel like a bit of a VC ghost town so what the hell is going on what the hell is going on here well thankfully a recent report has the answer so sit back and relax as we break this report down for you in simple terms and tell you where crypto could be headed next my name is Guy let’s dig in okay before we begin let’s get something straight this is not Financial advice to contemplate I’m here to share knowledge to help you explore but your choices are yours and nothing more crypto is a journey where risks Run High so d y r before you buy hit like And subscribe if these Rhymes are vibing and with that out of the way let’s explore what VCS have been buying right the report will’ll be summarizing for you today is titled quote crypto and blockchain Venture Capital Q4 2024 and it was published by Galaxy digital we’ll leave a link in the description if you’re interested in reading the whole thing now the report Begins by saying that in Q4 of last year VC’s invested $3.5 billion into crypto startups almost 50% more than in Q3 this money was allocated across a total of 416 deals which is 30% fewer than in Q3 what this suggests is that VCS have narrowed down their lists of top crypto picks and are investing much more aggressively into them anyway this brings the total VC investment for 2024 to 11.5 billion and the total number of deals throughout 2024 to 2,153 this is a slight increase from 2023 and the chart provided suggests that if 2024 is mirroring 2020 then 2025 is going to be a crazy year for VC investment the report then looks at the correlation between VC investment and the price of BTC the chart provided shows that BTC has pumped in previous Cycles in line with VC capital what’s more is that VC Capital tends to stick around after BTC hits its peak and that’s likely because VCS have rotated into altcoins just like the rest of us VC investment inter crypto hit record levels in early 2022 however it then fell off for Cliff and has struggled to pick up since despite btc’s impressive price action the report reckons that this Divergence between VC capital investment and btc’s price is down to a combination of weak allocator interest and Bitcoin specific narratives that have left leading narratives from 2021 in the dust those being web 3 nfts Dow tokens metaverse projects and game five for anyone wondering now Galaxy doesn’t really specify what it means by web 3 which is a tad confusing broadly speaking web 3 incorporates everything crypto under one rather vague umbrella so if we had to guess we’d assume that Galaxy means specific websites that are meant to replace their web 2 counterparts such as decentralized social media but honestly that’s just a guess anyway next the report looks at which stages crypto saw the most VC investment at in Q4 of last year as it happens 60% of VC Investments went to early stage companies while 40% of VC investment went to later stage companies this split makes perfect sense early stage projects have the most upside potential after all some Crypton native VCS that would have raised a ton of money in the last cycle could also still have access to that dry powder which makes you wonder where they plan to reallocate anyway the report adds that quote VCS raised new money in 2024 and Crypton native funds may still have access to dry powder from large raises several years ago and the report says that in Q4 the scales were beginning to tip in favor of later stage projects notably this is largely thanks to tether’s raise of $600 million from Kanto Fitzgerald recall that the total VC Capital invested in Q4 was $35 billion meaning that almost 1th of that comes from Cano buying a 5% state St in tether an obviously wellestablished crypto business you can learn more about why kenter is so bullish on Tether and what this could mean for usdt and the rest of the crypto Market by checking out the video right over here okay now the next part of the report looks at the valuations of VC backed crypto companies the report notes that VC backed projects suffered throughout 2023 but then well who didn’t but VCS began investing again in Q2 of last year as balance in the universe was restored and BTC broke its previous all-time high since then the size of VC deals increased throughout 2024 although crypto itself has risen more sharply the report adds that quote Q4 deals had a median pre-money valuation of $24 million and an average deal size of $4.5 million now next up are the categories of crypto projects that got the most investments in Q4 and this is where things get really interesting in rather bizarre turn of events it seems that the bundle of big winners from the last cycle came out on top to refresh your memory this includes things like web 3 nfts Dows metaverse and gaming this bundle raised a total of $771 million accounting for over 20% of VC investment so on the surface it looks like VC’s are still Uber bullish on last Cycle’s winners however there are two caveats to this the first is that this isn’t a fair representation of Nar narratives since this category has five narratives bundled into one the second caveat is that out of the 771 million invested 525 million went into just one project Praxis a quote internet native Alliance to accelerate technological progress and Revitalize Western Civilization they want to build a new city somewhere apparently so great for Praxis and those future praxian but beyond that it seems there’s not much else going on here in the grand scheme of things anyway the second category with the most VC investment is defi but again this isn’t a fair representation that’s because there was over $700 million invested in defi but $600 million of that comes from the aforementioned tether deal to the report’s credit it’s highlighted that if you remove the tether deal defi Falls all the way back to seventh place so then this means that technically the leading narrative is crypto infr structure followed by exchanges and borrowing protocols followed by AI just goes to show that following the big money doesn’t always mean following the smart money now if you cast your mind back to our summary of Galaxy’s Q3 Venture Capital report you might remember that they provided a God awful chart that looked kind of like sandart well it looks like Galaxy still feels that sandart is the way to go because here we have even more of it thankfully the report breaks down this absolute Isa so that we at least know what we’re looking at so the report explains that stable coins raised the most amount of VC money in Q4 at 177% thanks to that tether deal after that crypto infrastructure startups came second with 53 deals raising $592 million from VC’s 16% of the overall total after infrastructure plays it was web3 startups that came in a close third place with $587 million and exchanges that came fourth raising $200 million now what’s intriguing is that last Cycle’s winners saw the most VC deals in Q4 with 92 deals in total 37 of those were in gaming projects and 31 were in web 3 a fairly even split which suggests that VCS are equally as excited about these niches crypto infrastructure projects came in second place for VC deals count with 77 deals in total 11 more than in Q3 next up with 10% of VC deals was a grouped category of trading exchange investing and lending which saw 43 VC deals in Q4 presumably this group mainly includes centralized exchanges speaking of which if you’re looking to trade crypto on an exchange then we have great news for you you can use the coin Bureau deals page to sign up for the best crypto exchanges out there and get sign up bonuses of up to $100,000 and a deposit cash back of up to 75% along the way these deals won’t be around forever so take advantage of them while you can by using the link below anyway after exchanges come crypto companies building wallets and payment products both of which had the largest quarterly increase in deals at 111% and 78% respectively although in total there were only 35 deals between them we reckon that this will increase dramatically as the pay fi narrative kicks off for context payi is largely under the radar despite being one of the biggest emerging narratives that could bring crypto to mass adoption and you can learn more about payi by checking out the video right over here okay next the report looks at VC investment based on stage and category it reveals that in Q4 categories that saw mostly early stage Investments came from a range of niches including the 2021 winners so web 3 Dows nfts and metaverse projects as well as layer ones and layer 2os meanwhile things like defi exchanges and Mining saw mostly late stage Investments since these categories are generally more mature the report then Zooms in on these categories to see exactly how these Investments were distributed when it comes to early stage Investments a few categories stand out here notably 100% of investments in payments were early stage as was almost 100% of investments in compliance recall what we said about payi earlier last Cycle’s winners also stand out for early stage Investments since VCS will be looking to take advantage of these narratives if they take off again this cycle and encouragingly media and education also saw a significant amount of early Investments too this is bullish because the single best way to drive crypto adoption is through highquality crypto education so if you want to be top of your class make sure you’re subscribed now when it comes to VC deals by category this tells a similar story to VC investment by category the report notes that in q for there were 171 early stage deals and just 58 later stage deals when broken down into categories you can clearly see which areas VCS are actively looking into assuming that early stage also includes seed rounds and precedes then almost every category had the vast majority of deals in the early stages these would include AI wallets media and education payments and uh Venture all of which had 100% early stage deals interestingly the standout for later stage deals is compliance which makes perfect sense when you consider the regulatory landscape right now as things improve on that front VCS will want to capitalize on the companies that have the best regulatory support this is likely the same reason why other late stage standouts include Enterprise blockchains banking custody and layer one projects essentially these are more mature categories and are arguably the best position categories for when the regulatory ball starts rolling so to speak speak now the next part of the report looks at investment across different Geographic locations unsurprisingly the country that enjoyed the most VC deals in Q4 was the United States which accounted for nearly 37% of all deals Singapore followed in second place with a much lower 9% of VC deals followed by the dear old UK which had 8% of deals Switzerland had 5% of deals whereas here in the UAE just 3% of VC deals took place what’s crazy is that companies based in the US saw a huge decline in the amount of VC Investments specifically crypto companies with headquarters based in the US had 46% of venture capital in Q4 last year which is a whopping 17 percentage points lower than in Q3 this investment seems to have moved to Hong Kong where 177% of venture capital went to crypto startups trailing behind Hong Kong is the UK with 7% of VC Investments Canada with 6% and Singapore with 5% the report then looks at Investments by cohort it begins by comparing the levels of VC interest in companies founded in different years specifically between 2015 and 2024 what’s surprising is that 2019 projects got the highest levels of VC capital in 2024 by a fair margin so logically you’d think that it was also the 2019 projects that had the most VC deals but 2019 actually scored pretty low on that front it was in fact 2024 projects that had the highest number of deals the next part of the report looks at fundraising for crypto Venture funds the report explains that the bare Market combined with 2024’s Rocky macro conditions have made allocators less inclined to commit to venture investors than they were in the last bull market the report also notes that many people were speculating that the FED would cut interest rates from early 2024 but that didn’t really material until much later in any case the report adds that quote the total Capital allocated to venture funds has continued to decline quarter on quarter since Q3 2023 in fact 2024 as a whole was pretty bleak for VC interest with the lowest levels of fundraising since 2020 as the report explains there were just 79 new funds in 2024 collectively raising $5.1 billion the report also adds that the amount of fund raising during the hype of 2022 was roughly seven times higher than in 2024 despite the crypto Market generally heading in a more positive direction this has also resulted in a significantly lower average fund size with the lowest levels seen since 2017 for perspective that’s longer than many of you will have even been in crypto at all so then this brings us to the big question what does all of this mean for the crypto Market well something that stood out in this report report is that VCS are still incredibly focused on the big narratives from the previous bull market especially things like crypto gaming projects AKA gamey and web 3 projects remember though that Galaxy’s report doesn’t clarify what’s meant by web 3 anyway the reason this is exciting is simple these narratives have yet to really take off in the current bull market this suggests that if these narratives do see some traction the massive amounts of VC Capital behind them could act as rocket fuel for their further development mind you it could also mean a whole load of VC tokens waiting to be dumped on the heads of unsuspecting retail another thing that stood out in the report was that us-based companies saw a reduced level of VC support well now that the US has the most Pro crypto president indeed the only Pro crypto president in history we should probably expect to see that Trend reverse in a big way heck tracking sites like coin market cap and coin gecko now have entire sections dedicated to projects made in the US and we actually have a video about us projects coming out soon so watch this space anyway the regulatory changes in the US will also have a huge impact on stablecoin regulations which will seriously boost the adoption of stable coins for things like payments and remember you can learn more about payi right over here and of course once the US begins to lead the way with crypto regulation other countries around the world will likely follow suit as the old saying goes when the US sneezes the rest of the world catches a cold logically then the same thing applies when the US swallows the orange pill what this means is that countries around the world will start to work more closely with the crypto industry which will drive Innovation and adoption on a global scale exciting times what’s more is that thanks to the recent developments in the US sentiment in the crypto Market has been seriously uplifted this is when investors feel the most comfortable aping into all sorts of projects causing prices to pump across the board and this has the KnockOn effect of creating fomo for retail and institutional investors everywhere and best of all investors now have even more access to crypto thanks to the spot ETFs come to think of it the ETFs could explain why VC interest seems to be much lower than in previous years put simply Venture capitalists may be refocusing their efforts towards the spot ETF since they’re better regulated at least for now so it could very well be the case that VC’s never left they’re just with us in a different way now 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