Since May 2024, the cryptocurrency industry has raised over $100 billion for startups. Data from DefiLlama shows that by June 16, 2024, total funding reached $101.35 billion. The initial recorded funding in May 2014 was $17.14 million. By May 2024, monthly funding had risen to $280.25 million despite being lower than April 2024’s $777.11 million.

Cryptocurrency startup funding peaked in October 2021, with over $7 billion raised in a single month. February 2022 followed as the second-highest month, with $3.67 billion. Over the past four years, despite regulatory challenges and market volatility, the funding ceiling and floor have increased.

Geographically, nearly half of all cryptocurrency funding comes from U.S. investors. In the second quarter of 2023, the United Kingdom and Singapore followed, contributing 7.7% and 5.7% of total funding, respectively. High-profile deals from late 2023 to mid-2024 included significant investments in Together. 

AI and cross-chain protocol Wormhole, each raising $225 million. Totter, an open-source cloud storage firm, secured $101 million, while Eigenlayer added $100 million. Other notable raises included Swan Bitcoin’s $165 million and Blockchain.com’s $110 million.

Impact of Venture Capital and Token Sales

Venture capital deals and token sales have driven the cryptocurrency industry’s growth. Block Research indicates that over $95 billion has been invested in the sector since 2017. However, Bloomberg reports mixed results due to varied project outcomes.

Paul Veradittakit, managing partner at Pantera Capital, noted extended exit timelines in the industry, citing Coinbase Global Inc.’s $86 billion direct listing on the Nasdaq in 2021 as a rare exception. “Exits in the crypto industry are taking longer than usual,” he stated.

High-profile collapses such as FTX and BlockFi have made investors cautious. Bloomberg analysts mentioned that firms like Tiger Global Management LLC and Temasek Holdings Pte have reduced their investments in the sector. Temasek lost a $275 million stake in FTX and announced it would no longer invest in crypto exchanges.

Decline in Cryptocurrency funding

In 2021, funding for cryptocurrency startups peaked at $36.4 billion. DefiLlama said it dropped to $4.2 billion, the lowest level since 2016. Ray Hindi, CEO of L1 Digital, suggested that institutional backers lost money on crypto bets due to late investments or equity involvement. He believes early-stage token investments are safer and provide quicker returns. “Purchasing tokens in early-stage funding is a safer investment model,” Hindi remarked.

Despite challenges, the long-term growth trajectory for cryptocurrency startup funding remains significant. Growth is evident from the first recorded funding round in May 2014, at $17.14 million, to May 2024’s $280.25 million. However, April 2024 saw a higher funding amount of $777.11 million.

High-profile funding deals from late 2023 to mid-2024 included significant investments in Together.AI and cross-chain protocol Wormhole, each raising $225 million. Open-source cloud storage firm Totter raised $101 million, and Eigenlayer secured $100 million.

Swan Bitcoin and Blockchain.com also saw significant funding at $165 million and $110 million, respectively. Venture capital deals and token sales have been pivotal in the industry’s growth.