According to a report by Galaxy Digital, venture capital funding in the cryptocurrency sector rose by 28% in the second quarter of 2023, with crypto startups raising $3.2 billion. The increase reflects a resurgence of interest in the industry, especially in web3 projects and technologies like DAOs, the metaverse, and gaming.
Venture capital funding in the cryptocurrency sector saw a 28% increase in the second quarter of 2023, according to a report from Galaxy Digital published on Wednesday. Crypto startups raised $3.2 billion, up from $2.5 billion in the first quarter, demonstrating a resurgence of interest despite being significantly lower than the $10 billion raised during the same period in 2022.
The report by Alex Thorn, head of Galaxy Digital’s research, and Gabe Parker, a research analyst, indicated a growing positive sentiment towards crypto ventures, particularly in web3 projects. Web3 startups, including those focusing on DAOs, the metaverse, and gaming, garnered $758 million, or 24% of the total VC capital. Farcaster, a social media protocol, had the largest raise in this category with $150 million.
Layer 1 and Bitcoin layer 2 projects also attracted significant investments. Monad Labs, which is developing an Ethereum-compatible protocol, raised $225 million, the quarter’s largest round. Berachain, another layer 1 project, secured $100 million at a $1.5 billion valuation. Bitcoin layer 2 projects saw nearly $95 million in funding, marking a 174% increase from the previous quarter.
Overall, Galaxy Digital recorded 577 crypto deals in the second quarter, with early-stage deals comprising nearly 80% of the total funding.
