By Cheeky Rolo
Compiled by: TechFlow
Summarize
In the first half of 2024, there was a significant increase in financing activity in the Web3 space, with 1,240 projects raising $7.52 billion, a 24% increase in capital and a 58% increase in the number of deals compared to the second half of 2023. This outpaced the performance of the entire venture capital market, which saw a 16.1% increase in capital but a 16.7% decrease in the number of deals.
Web3 pre-seed funding showed strong resilience, hitting a new high in the first half of 2024 with $189 million raised across 80 deals. Series A funding also showed strong growth, raising $1.56 billion across 77 deals, almost double the amount in the second half of 2023.
In the second quarter of 2024, the financing environment for global startups improved, mainly due to the increase in large financing rounds and a surge in funding in the field of artificial intelligence, with artificial intelligence financing doubling to US$24 billion. Despite market fluctuations, the overall trend shows a gradual recovery, especially in the seed and Series A stages.
The growth in AI and Web3 investments indicates investor confidence in these high-growth sectors, driving a stable and improving market environment through 2024. This trend suggests that there could be upward momentum in the coming quarters, especially in early-stage deals.
Highlights for the first half of 2024
Source: Messari, quarterly transactions at each stage of Web3
*Note: About 20% of projects did not disclose basic information such as the amount raised; “number of deals” refers to those projects that disclosed the amount raised.
In the first half of 2024, a total of $7.52 billion was raised across 1,240 projects at all stages. This is an increase of 24% in funding and 58% in the number of deals compared to the second half of 2023.
In the first quarter of 2024, 624 projects raised a total of $3.66 billion, a 6.2% decrease from the funds raised in the previous quarter.
In the second quarter of 2024, 616 projects raised a total of $3.86 billion across all funding stages, a 5.5% increase from funding raised in the previous quarter.
Preliminary results suggest that the first half of 2024 is not as good as the first half of 2023, when 1,041 deals raised $13.9 billion. This means that the amount of money raised in the first half of 2024 was 45.8% less than in the first half of 2023.
However, this significant difference can be explained by the success story of one company. In March 2023, Stripe raised $6.5 billion. This event accounted for 83% of funds raised that month, as well as 63% of funds raised in the first quarter of 2023 and 47% of the first half of 2023 total. If we treat Stripe's funding as a special case and remove it from the data, fund raising performance in the first half of 2024 is actually 2% higher than last year's first half, which is 7.36 billion raised in the first half of 2023 (excluding Stripe) Dollar.
Source: Messari, 6-month transactions at each stage of Web3
Note: Stripe’s $6.5 billion funding round in March 2023 has been removed from this chart’s data
Looking at the overall venture capital market, a total of $39.6 billion was raised through 2,525 deals in the first half of 2024. In contrast, $34.1 billion was raised through 3,031 deals in the second half of 2023. This indicates that from the second half of 2023 to the first half of 2024, funding increased by 16.1%, but the number of deals decreased by 16.7%.
According to Carta's data, the number of transactions and total financing amount in the second quarter of 2024 increased significantly compared with the first quarter of 2024, with a total of 1,287 rounds of financing completed, with a total amount of US$20.9 billion. Since the third quarter of 2023, it has shown a A trend of steady growth quarter by quarter. The second quarter of 2024 recorded the highest level of venture capital funding in the past 12 months.
Source: Carta, Hamza Shad, Private Equity Market Conditions, Q2 2024, August 2024
Source: Crunchbase, Gené Teare, “Global financing and M&A pick up in the second quarter, with AI financing surging,” July 2024
Global startup funding rebounded in Q2, reaching $79 billion, up 16% from the previous quarter and 12% from the $71 billion in Q2 2023. Much of this growth was driven by mega-rounds of over $100 million. Crunchbase data shows that we are now in the eighth to ninth quarter of a broader downward funding trend. While this quarter’s funding is among the highest since Q1 2023, it doesn’t necessarily mean that the venture capital market has fully recovered. Funding levels have fluctuated widely from quarter to quarter since 2023, primarily due to an increase in large funding rounds for pre-IPO companies and companies in the AI space.
Overall, funding performance in the Web3 space has improved slightly compared to the broader venture capital market. This is not only due to a relative increase in funds raised (Web3 increased 24%, while the broader market increased 16%), but also due to a significant increase in the number of Web3 funding deals (Web3 increased 58%, while the broader market decreased 17%).
Web3 Pre-Seed Funding
Source: Messari, Web3 Pre-Seed Deals and Quarterly Fundraising
Pre-seed fundraising has shown the strongest resistance to bearish trends in the Web3 space and the broader venture capital market since Q2 2023. The number of pre-seed deals has also been growing quarter-over-quarter since Q3 2023. In Q1 2024, Web3 venture capital raised a new all-time high in pre-seed funding: $106 million across 36 deals.
Source: Messari, Web3 pre-seed stage transactions and half-year fundraising
This also set a new record for Web3 pre-seed stage fundraising in half a year: US$189 million was raised through 80 transactions in the first half of 2024, while the previous highest record was US$184 million raised through 102 transactions in the first half of 2022.
Web3 Seed Round and Series A Funding
Source: Carta, Hamza Shad, The State of the Private Market: Q2 2024, August 2024
Data provided by Carta shows how seed and Series A deals are performing in relation to the broader venture capital market. The number of seed deals in Q2 2024 was almost the same as Q1, while Series A deals outperformed the previous quarter, suggesting that Q2 could be a turning point for Q1, as the number of seed and Series A deals in Q1 was the lowest since the beginning of 2019. While total funding for both stages rose slightly in Q2, it is worth noting that Series A funding in Q1 reached its lowest level in five years. While Q2’s 16% growth still puts it among the lower quarters for Series A funding, it could mark the beginning of an upward trend, albeit a weak sign.
The expected growth trend for Seed and Series A deals is even more evident when viewed in the context of the broader fundraising market.
Source: Messari, Web3 seed round transactions and quarterly fundraising
Source: Messari, Web3 seed round transactions and half-year fundraising
In the first half of 2024, $1.23 billion was raised at the seed stage, covering 256 deals. This is a 47% increase in capital raised and a 49% increase in deal count over the same period last year. Although seed-stage funding fell 7% from the first quarter to the second quarter of 2024, overall funding has increased for two consecutive quarters. Even so, the second quarter's funding totals are still higher than any period from the second quarter to the fourth quarter of 2023.
Source: Messari, Web3 Series A deals and quarterly funding
Source: Messari, Web3 Series A transactions and half-year fundraising
The upward trend in Web3 Series A deals is even more significant, with both funding and deal count growing each quarter since the end of Q4 2023, in contrast to pre-seed or seed-stage deals during the same period. Overall, a total of $1.56 billion was raised through 77 Series A transactions in the first half of 2024, almost double the amount in the second half of 2023 (a 97% increase), and transaction volume also increased by 75%.
In addition, funding in the AI sector has surged, doubling quarter-on-quarter to $24 billion, accounting for a large portion of total investment. Public token sales continue to dominate, while early-stage venture capital activity remains stable. This shows that investor confidence in high-growth areas such as AI and Web3 remains strong, helping to stabilize and improve the market environment in 2024.