The first quarter of 2024 saw a significant increase in investment in Web3 firms, with a growth of 55%, indicating a renewed interest from venture capitalists (VCs) in the crypto industry. According to a report by QuickNode and Artemis, there was also a 36% rise in the number of Web3 VC investment deals compared to the previous quarter.
The majority of investment went towards Web3 protocols related to artificial intelligence (AI) and gaming. This is evident in the quarterly number of Web3 investment deals, as shown in the graph provided by QuickNode.
In a further demonstration of VC interest in Web3, Paradigm, a crypto-focused VC firm, led a $225 million funding round for Monad Labs. Monad Labs is developing a new layer-1 blockchain network that aims to compete with Solana. This funding round was announced on April 9.
Two of the largest early-stage investment rounds in the quarter were a $42 million Series B round for Berachain and a $35 million pre-seed round for 0G Labs, which focuses on data availability blockchain for AI protocols.
Seed round deals experienced the most growth, increasing by 53% compared to the previous quarter, suggesting a heightened interest in early-stage investments. Series A and seed funding rounds also saw a significant increase in capital inflows, indicating a renewed willingness from VCs to invest in Web3.
Notably, several investment deals were announced leading up to the 2024 Bitcoin halving. Mezo, a Bitcoin layer-2 network, completed a $21 million Series A funding round led by Pantera Capital on April 9. Mezo allows investors to earn yield based on the duration they hold their tokens and is described as a “Bitcoin Economic Layer.”
On April 3, reports surfaced 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-breaking $4.5 billion.
The renewed interest from VCs in Web3 and the crypto industry as a whole is evident, signaling a shift in investment focus towards Bitcoin DeFi.