March Sees 53% Surge in Crypto VC Funding

In March, there was a significant increase in venture capital funding for the crypto industry, with a 52.5% month-on-month jump. Crypto projects received a total of $1.16 billion, primarily allocated to infrastructure and decentralized finance initiatives. According to RootData, there were 180 publicly announced investments in the past month, marking the highest monthly figure since April 2022. About 20% of the deals secured funds ranging from $1 million to $3 million, while just over 15% raised between $5 million to $10 million. The majority of funded projects were based in the United States, although they accounted for less than 10% of the total deal count.

The largest fundraising took place in the Ethereum layer-2 blockchain sector, with Optimism selling $89 million worth of its tokens in a private deal. Zama, a cryptography startup, secured the second largest amount, with a $73 million Series A funding round. Compared to February, the number of deals increased by 25% in March, and there was a more than 70% growth compared to the same period last year. The total amount raised also experienced a 28% increase compared to March 2023.

Several venture capital firms have expressed their interest in crypto-related investments for the coming year. Andreessen Horowitz (a16z) set aside $30 million for a fund specifically focused on Web3 gaming. Co-founder Marc Andreessen and Galaxy Digital also made significant contributions to VC firm 1kx’s $75 million fund, which targets crypto-based consumer apps. In February, Hack VC raised $150 million to support early-stage crypto and artificial intelligence startups.

Infrastructure projects received the highest funding in March, accounting for nearly $283 million, which is approximately 25% of the total VC funding. Decentralized finance (DeFi) projects followed closely with $228.1 million, making up nearly 20% of the total funding. Centralized finance (CeFi) projects, such as exchanges, secured the third-highest amount at $85.5 million. No funding was raised in the DAO category. This is the first time since November that VC funding for the crypto industry has exceeded $1 billion in a single month. This surge comes after a challenging year for crypto fundraising in 2023, following the collapse of FTX, which impacted the crypto markets. VC funding has experienced monthly gains so far this year, as enthusiasm for crypto has rebounded alongside the market, which PitchBook credits to the introduction of spot Bitcoin exchange-traded funds (ETFs) in the United States.