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Crypto Fundraising Soars 40% With Together AI Securing $106 Million Deal 

Published May 20, 2024 4:08 PM
Shraddha Sharma
Published May 20, 2024 4:08 PM

Key Takeaways

  • In the first quarter of 2024, crypto fundraising saw a major increase compared to 2023.
  • The biggest deal of the quarter reflects interest and investment in generative AI and decentralized infrastructure. 
  • Infrastructure startups led the funding rounds in Q1 2024 as per a PitchBook report.

Crypto fundraising rose in the first quarter of 2024. According to PitchBook, startups raised $2.4b across 518 deals, marking an increase in both invested capital and deal volume.

The largest deal of the quarter went to Together AI, which secured $106m as AI continues to be the hot sector within the tech space. 

Crypto Fundraising Sees Growth

The first quarter started with a substantial increase in crypto fundraising  suggestive of a bull market in 2024.

With startups securing over $2.4b across 500+ deals, they represent a 40.3% increase in invested capital. The rise also marks a 44.7% increase in deal volume compared to the previous quarter, according to the PitchBook report .

The growth could mean investor confidence is getting back up as Bitcoin price inches close to the $67K mark. 

PitchBook’s report attributes this surge to positive sentiments with the trend expected to continue throughout 2024. This could potentially mean that only a major market downturn based on contingencies can pull the funding market into negative territory.

Till then, the rise in fundraising is a positive sign for the market, indicating a healthy appetite for risky assets. 

CCN reported in February that there is a notable rise in venture capital investments following a modest recovery in late 2023. January’s increase in funding also suggested potential for a market rebound, driven by investor optimism and new deals that extended in the quarter.

Infrastructure Startups Leading the Charge

The PitchBook report highlighted that infrastructure startups led the way in funding during the quarter. Notable among them were the Ethereum restaking platform EigenLayer and the fully homomorphic encryption (FHE) development platform Zama. 

EigenLayer’s $100m Series B round and Zama’s $73m Series A round could impact the pace of crypto infrastructure development. In turn, these will fuel the development and adoption of newer technologies, contributing to the overall growth.

The largest deal of the quarter went to Together AI, a developer of an open-source, decentralized cloud platform for generative AI. The startup raised $106m in an early-stage round led by Salesforce Ventures at a $1.1b pre-money valuation. The deal follows its $102.5m Series A at a pre-money valuation of $463.5m in Q4 2023.

Together AI’s success is part of the broader decentralized physical infrastructure network segment, which continues to be one of the fastest-growing areas in 2024 along with the interest in generative AI. The PitchBook report suggests that this segment will likely receive major investor interest in the coming months, driven by the need for decentralized solutions and innovative technologies.

Compared to 2023, valuations were reportedly up across all stages in Q1 2024. That said, the higher valuations indicate that investment rounds have become highly competitive, especially in the early stages, as per PitchBook. The competitive nature of early-stage investments could suggest that investors are keen to get in on the ground floor of promising startups, driving up valuations.

Since Investors are willing to commit more capital to startups they believe have major growth potential. This trend will continue as long as the market remains favorable and investor sentiment stays positive.

CoinShares Records Significant Inflows

The report comes at a time CoinShares recorded  $932m in digital asset inflows. The positive sentiments reportedly arise in response to the prospect of interest rate cuts by the Federal Reserve in the US,

Digital asset investment products saw inflows for the second consecutive week, with just 3 trading days accounting for 89% of the total flows. This influx of capital is seen as an immediate response to the CPI report, as per CoinShares.

Bitcoin was the primary beneficiary, with $942m in inflows and virtually no outflows into short Bitcoin.

Positive Investor Sentiments Could Persist 

With the first quarter of 2024 driving crypto fundraising, with an increase in both capital that is invested and the deals that are carried, a positive trend is expected for the rest of the year.

Together AI’s $106m deal highlights the growing interest in decentralized infrastructure solutions and generative AI. 

Rising valuations and larger deal sizes could also mean that the competition in the sector is heating up, particularly with the early-stage startups. CoinShares’ substantial inflows also reflect positive investor sentiments building up, driven by the expectations of interest rate cuts. 

As 2024 progresses, a Bitcoin price rise could indicate a stronger market supporting funding in the sector. 

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