Investment in Web3 companies experienced a significant surge of 55% in the first quarter of 2024, indicating a renewed interest in crypto from venture capitalists (VCs). The number of VC investment deals in Web3 also saw a notable increase of 36% compared to the previous quarter, according to a Q1 on-chain report by QuickNode and Artemis.
The majority of the investment went towards artificial intelligence (AI) and gaming-related Web3 protocols, as highlighted in the report. Additionally, Paradigm, a crypto-focused VC firm, led a funding round of $225 million for Monad Labs, a company developing a new layer-1 blockchain network to compete with Solana. This funding round was announced on April 9th.
Two other notable funding rounds during the quarter were a $42 million Series B round for Berachain and a $35 million pre-seed round for 0G Labs, a blockchain focused on data availability for AI protocols.
Seed round deals experienced the most growth, with a 53% increase compared to the previous quarter, indicating a heightened interest in early-stage investments. Series A and seed funding rounds also saw a significant increase in capital inflows, almost doubling compared to the previous quarter. The report suggests that this reflects VCs’ renewed willingness to invest in Web3.
Leading up to the 2024 Bitcoin halving, several noteworthy investment deals were announced. Mezo, a Bitcoin layer-2 network, completed a $21 million Series A funding round on April 9th, with Pantera Capital as the leading investor. Mezo allows investors to earn yield based on the duration they hold their tokens, positioning itself as a “Bitcoin Economic Layer.”
Furthermore, reports emerged on April 3rd about Paradigm negotiating to raise up to $850 million for a new fund, potentially making it the largest raise in the crypto industry since May 2022, when Andreessen Horowitz raised a record-setting $4.5 billion.
In related news, Binance Labs has shifted its investment focus to Bitcoin decentralized finance (DeFi), further indicating the growing interest in the crypto space.