Crypto VC Trends in Q4 2024

In the fourth quarter of 2024, the crypto (cryptocurrency) market continued to be influenced by macroeconomic and regulatory environments, yet it showed steady growth, with VC (venture capital) investment levels remaining nearly on par with the previous year. This article provides a comprehensive overview of crypto VC investment trends in Q4 2024, based on a preview of the PitchBook Emerging Tech Research report, "Q4 2024 Crypto VC Trends" (published February 7, 2025). We will break down specialized topics in an easy-to-understand manner, incorporating actual fundraising cases and segment-specific analysis results.

Article:
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1. Crypto VC Trends in Q4 2024

1-1. Overall Overview

Crypto-related VC investment in the fourth quarter of 2024 (hereinafter Q4) increased by 13.6% quarter-over-quarter (QoQ), rising from $2.2 billion to $2.5 billion. However, the number of deals decreased by 14.6%, from 411 to 351, indicating a growing trend of selective investment where "investors are maintaining a certain level of capital supply willingness but are being more rigorous in their selection of investment targets."

Furthermore, for the full year 2024, total investment reached $10 billion across 1,940 deals, which is nearly the same level as in 2023 ($10.3 billion across 1,936 deals). This suggests that "despite macroeconomic headwinds and regulatory challenges, the crypto sector remains an attractive investment destination."

1-2. Characteristics of Valuations and Funding Amounts

A notable point in 2024 was the significant increase in valuations for seed to early-stage companies. For example, the median valuation for the seed stage (including pre-seed) rose from $11.8 million the previous year to $20 million, while the early stage saw a significant increase from $25 million to $52.3 million.
On the other hand, the late stage saw only a slight increase from $43.7 million to $45.3 million, suggesting that fundraising for middle-stage and late-stage companies has become somewhat cautious. In terms of actual funding amounts, the median for the seed stage rose 20% from $2.5 million in 2023 to $3 million, and the early stage increased by approximately 26.9% from $3.8 million to $4.8 million. Conversely, the late stage saw a slight decrease from $6.4 million to $6.3 million.

It has been pointed out that "the more mature a project is, the more it tends to avoid relying on large-scale funding and instead extends its runway with the minimum necessary capital," which can be described as a strategic fundraising stance in anticipation of an still-uncertain exit environment and market conditions.

2. Crypto VC Ecosystem and Segments

2-1. Infrastructure/Developer Tools

In Q4, there was a trend of investment concentration in infrastructure projects dealing with scalability, interoperability, and developer tools. In particular, startups strengthening blockchain foundational technologies such as Layer 1 and Layer 2 continued to attract attention, and investment also flowed into companies proposing decentralized data storage and new consensus algorithms.

There is also sentiment that "infrastructure in the crypto space is viewed as the 'foundation for new growth,' with high-performance chains and technologies that improve developer experience being seen as particularly promising," suggesting the possibility of further consolidation through mergers and acquisitions from 2025 onwards.

2-2. DeFi (Decentralized Finance)

In the DeFi sector, which provides services such as decentralized exchanges (DEX), lending, and staking, deal activity at the seed stage remained active. On the other hand, large-scale deals showed a slight downward trend, with attention shifting toward emerging protocols and startups that are innovating in liquidity pool design.
In particular, protocols specializing in "complex financial products that combine staking rewards and yields" are being evaluated, leading to a selection process where projects capable of providing unprecedented added value are being favored.

2-3. Web3 (Content, Social, Metaverse, Gaming, etc.)

Continuing from the second half of 2024, investment in Web3-related projects has been active. In the metaverse and blockchain gaming sectors, a key characteristic is that "capital is flowing into projects that incorporate game design focused on user experience and tokenomics."
Additionally, interest has been directed toward the expansion of digital ownership using NFTs and the social platform sector aiming for the decentralization of social media, with the point being noted that governance models where token holders participate in platform decision-making are gradually moving into the practical application stage.

2-4. Access Layer (Wallets, Payments, Onboarding)

The "gateway" sector, including wallets, exchanges, and payments for end-users and institutional investors, also continues to have steady demand as an investment target. In particular, payment startups that serve as a "bridge between existing financial systems and crypto assets" are becoming an attractive theme for investors by providing solutions that address regulations and foreign exchange management that differ by region and country.

3. Major Fundraising and Exit Cases

3-1. Notable Pre-Seed/Seed Funding

• Zero Gravity (Blockchain Network/Layer 1):
  Raised $75 million in November. Hack VC participated in the round.

• StakeStone (DeFi Lending/Staking):
  Raised $22 million in November. Led by Polychain Capital and SevenX Ventures.

Many of these seed deals are characterized by the active involvement of major funds, aiming to develop "highly novel protocols that solve blockchain technology challenges" or "hybrid services combined with traditional finance."

3-2. Large Early-Stage Deals

• Praxis (Web3 Decentralized Community/Metaverse Sector):
  Raised $525 million in October. Investors included Arch and Manifold Capital Partners.

• Cassava Network (Onboarding/Payments):
  Raised $90 million in December. Investors undisclosed.

In the early stage, where larger funding rounds are seen compared to the seed stage, "Web3 community infrastructure building" and "payment/onboarding solutions directly linked to user acquisition" are receiving high praise. Additionally, projects strengthening foundational technology, such as TON, which specializes in Layer 1 and scalability, have also succeeded in raising $30 million-scale funding.

3-3. Exit Cases

In Q4 2024, M&A continued to be the primary exit method. The acquisition of infrastructure startup Bridge by Stripe for $1.1 billion in October is particularly symbolic.
In addition, M&A for Web3-related projects is active, with multiple companies such as Just Wont Die and Tokenproof seeking to build larger communities and service systems through acquisitions and integration. In exits, there is a strong "aim to incorporate complementary technologies and services," and long-term synergy creation is beginning to be prioritized over valuation or acquisition price.

As a result, 2024 saw a total of over $10 billion across 1,940 deals, maintaining the same level as the previous year while investors became more selective. In particular, valuation increases in seed and early stages were notable, with projects specializing in infrastructure technology, decentralized AI, and Web3 community building receiving high evaluations. On the other hand, in the late stage, cautious funding strategies were observed, with many companies avoiding large funding amounts and aiming to continue operations with pinpoint additional capital.

From 2025 onwards, further integration and acquisitions in infrastructure, exchanges, and custody sectors may occur, potentially making differentiation between projects clearer. Furthermore, new areas utilizing high-performance blockchain and tokenization technology, as well as startups aiming for the fusion of crypto assets and AI, will continue to attract investor attention. Given the shift from an "era of speculative money" to an "era where select technologies and real demand are valued," the market is expected to continue its stable expansion and maturation.

While it is inevitable that the market will continue to be affected by changes in the regulatory environment and macroeconomic conditions, the resilient fundraising and steady project growth seen in the crypto industry in 2024 serve as a basis for "long-term investment appeal."

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