Venture Capital Investments in Web3 Increased 55% to $1.8B in Q1 2024: Report

Sectors that saw the most significant revival of venture capital enthusiasm are AI and gaming, receiving investments of $210 million and $125 million, respectively.

Venture capital (VC) firms regained interest in crypto firms last quarter, as seen in the size of investments they made in digital asset startups. 

A Q1 2024 report by blockchain infrastructure firm Quicknode and institutional crypto data platform Artemis revealed that venture capital investments in web3 increased by 55% to $1.8 billion last quarter from the $1.1 billion seen in Q4 2023.

VC Investments Rise 55%

According to Quicknode and Artemis, the number of web3 deals also rose 36% to 340 from 250 in Q4 2023, signaling increasing investments for the first time in more than a year, a favorable shift in VC sentiment for web3, and a strong rebound in venture capital confidence and investment activity.

“VC sentiment highlights a burgeoning era of consumer social experimentation fueled by crypto advancements and efficient transactions. Key focus areas include innovative solutions, strategic market approaches, sustainable financial practices, and ensuring future growth through diversified leadership and equipping them with appropriate tools and ethos,” the firms said.

Sectors that saw the most significant revival of venture capital enthusiasm are artificial intelligence (AI) and gaming. However, AI saw more interest and investment as VCs explored how the sector could become a major driver within web3. A project that benefited from this high interest was OG Labs, which received $35 million in pre-seed funding to build a modular AI blockchain.

On the other hand, the developer tools and trading sectors experienced minimal increases in funding and deal counts. Quicknode and Artemis said this indicated a more cautious approach from investors, probably due to less immediate returns from the sectors and uncertainties about their operations.

Restoring Growth Trajectories

In terms of funding rounds, seed and series A rounds experienced substantial growth, with the former recording a 53% quarter-on-quarter increase to $800 million, indicating heightened interest in early-stage ventures. With nearly double the amounts raised in the last quarter of 2023, these funding rounds reflected VCs’ renewed willingness to invest in web3.

Quicknode and Artemis said the first quarter of 2024 did not just restore growth trajectories in web3 venture capital but also underscored strategic shifts toward areas VCs believe would significantly impact the evolution of the blockchain sector.

“This period has set a precedent for energetic and strategic engagements in web3, reinforcing the belief in its significant role in the broader technological ecosystem,” the companies added.