Crypto VCs make the market go round, right? Well, they sure did back in the first quarter of 2022. They invested no less than $12 billion in crypto start-ups. That was during the last bull run. However, ever since, their investments dropped quarter on quarter.
Currently, we’re looking at $2-3 billion investments per quarter by crypto VCs We’re seeing for the first time an uptrend again, since that Q1 in 2021. Q1 and Q2 in 2024 saw an increase in investments by crypto VCs. So, why are crypto VCs investing less and what are crypto VCs currently investing in?
Why Are Crypto VC Investments Down?
Altcoins are currently underperforming. So, you can ask yourself, whatever happened to alt season? Well, we first need to look back at the previous alt season during the 2021 bull run. Crypto was on fire and everything went haywire. Retail entered the market and there seemed to be no limits. VCs also started to pump money into new projects. Up to the tune of $12 billion in Q1, 22. That was and still is very much unprecedented.
So, a VC invests capital into a project at an early stage. In general, that’s around 6 months to 2 years before it launches. They receive a favorable price for the token, but there’s vesting involved. Meaning, that they typically have to wait at least a year before they see their first project tokens.
Source: X
With the VC funding, projects can start developing their ideas. The bull market also showed the potential upside for VCs, by investing early. As a result, there was an increase in new projects and their tokens. But then Luna, FTX, and some other projects failed. The bear market started to rage in earnest.
This meant all projects, sitting on that VC money, delayed launching their project. You don’t want to launch during a crypto winter. Many that did launch, didn’t survive. Until Q4-2023 started. The market started an uptrend again. This resulted in an overload of projects launching. Like, 1 million between April and June.
So, there are too many projects launching. Plus, we saw the meme craze as well. In the meantime, VCs started to back off from throwing money around. They didn’t see interesting returns coming their way.
Source: X
And that’s it in a nutshell, how we find ourselves where we currently are. Still, crypto VCs are investing. So, let’s check out what they are investing in.
Sentient (AI)
As this Galaxy picture shows, 5 categories take up 70% of VC investments during Q2, 2024. Some are rather broad descriptions. For example:
- Web3/NFT/DAO/Metaverse got 24%.
- Infrastructure walked away with 15%.
- Trading/Exchange/Investing/Lending amassed 12%.
- Layer 1s also had 12%.
- Layer 2/Interoperability got 7%.
Either way, I’m going to show you some projects in which VCs are currently investing in. So, I’m kicking this off with Sentient, an AI project. They raised $85 million in their seed round. A seed round is when things start to become serious. It comes after the pre-seed round and shows that your project is growing.
Sentient is an AI research organization. It develops a new Open AGI economy for AI builders and creators. AGI is artificial general intelligence. The project saw a handful of tier 1 VCs invest. There were also plenty of tier 2 and 3 VCs. Like:
- Pantera Capital
- HashKey Capital
- The Spartan Group
- Delphi Ventures
- Framework Ventures
So, seeing an AI project here, with such a big investment, shouldn’t come as a surprise. That is after all a hot crypto sector this year. Sentient also has an airdrop going on. If you take part in their testnet, you may qualify. Check out this form and fill it out.
MegaETH (Layer 1)
MegaETH is a layer 1 chain. It aims to bring Web2-level real-time performance to crypto. That would be a first, by the way. It wants to bridge the gap between blockchains and traditional cloud computing servers. As the name implies, that’s for Ethereum L2s. It has a couple of features that stand out. For instance:
- High transaction throughput.
- Abundant compute capacity.
- Millisecond-level response time even under heavy load. This is a unique feature.
Source: X
Late June, investors raised $20 million in a seed round. This included, among others:
- DragonFly Capital. This VC has a 14.88x ROI with 152 projects.
- Vitalik Buterin, as Angel investor.
- Big Brain Holdings.
- Figment Capital.
Well, if you ask me, anything that Vitalik invests in is worth checking out. Whether you like Ethereum or not. $20 million is also a nice figure. That will keep the project going for a while.
Conduit (Infrastructure)
Conduit is an infrastructure platform for crypto. It offers scaling opportunities to developers. Conduit built its platform on the OP stack. However, already over 200 testnet and main nets deployed on Conduit. Combined, these chains lock a total of $1.2 billion in TVL. That’s the Total Value Locked.
It already expanded on chain computing on Ethereum by 15x to date. That’s measured in MGas/s or, in other words, it presents the runtime gas cost. That’s the ratio of gas consumption in time. It offers RaaS or Rollups-as-a-service.
For example, Conduit handles things like scalability, reliability, and upgrades. As a developer, this allows you to concentrate on building and improving your app. In late June, during a ‘Series A’ round, it raised $37 million. In March, it already raised $7 million during its seed round. So, it already totals $44 million in funding.
Source: X
Investors for the Series A round were, among others:
- Paradigm, they have a massive, 1381x ROI with 93 projects. That’s impressive.
- Coinbase Ventures, with a 10.44x ROI over 401 projects.
Some big guns at Conduit’s start into crypto! As you may have noticed, none of these projects have a token yet. However, if you follow our Alpha channel with tips on how to find new projects, they should pop up. Or, for that matter, with any system you use to track projects before their TGE.
As I mentioned plenty of times before, I will say it one more time, it pays off to be early in crypto. So, did you hear of these projects yet.
Disclaimer
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted levels of risk tolerance of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses you may incur due to any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. Copyright Altcoin Buzz Pte Ltd.