The total investment in Web3 firms increased by 55% in the first quarter of 2024, signaling the return of venture capital (VC) interest in crypto.

In addition to an increase of over 55% in total investment, the number of Web3 VC investment deals rose 36% in the first quarter of 2024 compared to the previous quarter, according to a Q1 on-chain report by QuickNode and Artemis.

Artificial intelligence (AI) and gaming-related Web3 protocols took the lion’s share of the investment. According to the report:

“[This indicates] that investments are increasing for the first time in over a year, and suggesting a favorable shift in VC sentiment for web3. In particular, AI and Gaming have garnered the most resounding revival of venture capital enthusiasm among the categories.”
Web3 investment up 55% in Q1 as crypto VC interest rebounds image 0 Quarterly number of Web3 investment deals. Source: QuickNode

Further showcasing VC interest in Web3, crypto-focused VC firm Paradigm led a $225 million funding round into Monad Labs, which is building a new layer-1 blockchain network set to compete with Solana. The round was announced on April 9.

Two of the quarter's largest early-stage rounds included a $42 million Series B round by Berachain and a $35 million pre-seed round for 0G Labs, a data availability blockchain for AI protocols.

Seed round deals saw the most growth, up 53% quarter-on-quarter, suggesting increased interest in early-stage deals. Series A and seed funding rounds nearly doubled their capital inflows compared to the previous quarter, “reflecting VCs’ renewed willingness to invest in Web3,” according to the report.

Web3 investment up 55% in Q1 as crypto VC interest rebounds image 1 Quarterly number of Web3 investment deals, by round. Source: QuickNode

Related: With 10 days to the halving, analysts predict $150K Bitcoin top

Crypto VC interest reignites ahead of the Bitcoin halving

Several notable investment deals were announced in the period leading up to the 2024 Bitcoin halving .

On April 9, Bitcoin layer-2 network Mezo announced the completion of a $21 million Series A funding round led by Pantera Capital. Mezo enables investors to earn yield based on the time they hold their tokens. They describe it as a “Bitcoin Economic Layer.”

On April 3, reports emerged about Paradigm negotiating to raise up to $850 million for a new fund, which would make it the largest raise in the crypto industry since May 2022, when Silicon Valley-based VC firm Andreessen Horowitz raised a record-setting $4.5 billion .

What Could Go Wrong with Bitcoin Halving? Source: Cointelegraph

Related: Binance Labs shifts investment focus to Bitcoin DeFi