Venture capital investments in the cryptocurrency sector reached an impressive $4.9 billion during the first quarter of 2025, signifying the industry’s most vigorous fundraising effort since late 2022, as reported by Galaxy on May 1.
This growth reflects a substantial 40% increase compared to the previous quarter, with 446 transactions concluded—marking a 7% rise in deal volume, according to the same report from Galaxy.
The overall figure indicates a resurgence in investor confidence regarding digital assets; however, it is largely attributed to a major transaction: MGX’s $2 billion investment in Binance, which constituted over 40% of the total capital raised in the quarter.
Binance Transaction Reshapes Funding Landscape
Excluding this significant transaction, total funding would have been $2.8 billion, reflecting a decline of 20% compared to Q4 2024.
Despite this, the Binance transaction has significantly altered the funding landscape. It catapulted the Trading, Exchange, Lending, and Investing category to the forefront, amassing $2.55 billion—an increase of 47.9%.
If Binance’s investment is set aside, the decentralized finance (DeFi) sector would have emerged as the leader for the quarter with $763 million in funding.
Web3 startups led in terms of deal counts, recording the highest activity with 73 transactions, accounting for 16% of the total.
This category saw substantial participation from gaming platforms, NFTs, DAOs, and metaverse initiatives, while firms related to trading followed closely with 62 deals.
For the first time since early 2021, a majority of the funds were directed toward later-stage companies, with 65% of the overall funding allocated to Series A rounds and beyond.
Top 5 Crypto Fundraising Rounds this week @campnetworkxyz – $25M at a $400M valuation
> Purpose-built L1 blockchain for powering AI agents trained on user-owned IP
> @1kxnetwork, @blockchaincap, & @OKX_Ventures@0xMiden – $25M
> ZK-enabled L1 spun out from @0xPolygon, which… pic.twitter.com/BTCW0VMA2N
— Jake (@immutablejacob) May 2, 2025
Pre-seed and early-stage activities remained robust but showed a slight decline, indicating a more measured and concentrated approach to investment.
Startups based in the United States accounted for 38.6% of the total deals, reaffirming the country’s dominance in the global crypto market.
The United Kingdom (8.6%), Singapore (6.4%), and the United Arab Emirates (4.4%) were the next leading regions.
Furthermore, Galaxy’s report highlighted a renewed connection between Bitcoin’s price movements and venture funding trends—a relationship that had faded in recent years but is now appearing to strengthen over the long term.
Crypto Fundraising Remains Challenging
Nonetheless, the process of raising funds continues to be a struggle. Galaxy pointed out ongoing challenges stemming from the downturn between 2022 and 2023, along with a shift in investor interest toward artificial intelligence.
The AI sector is now attracting the level of attention and capital flows that cryptocurrency experienced during its previous bull market. Consequently, crypto-focused venture funds raised only $1.9 billion in Q1 2025.
Despite these obstacles, Galaxy anticipates that 2025 will surpass the previous year in total capital raised.
As noted, Kaito AI has designated Paradigm as the top-performing crypto VC firm over the past year, showcasing an 11.80% performance metric.
Paradigm outperformed other firms like Alliance (10.64%), Dragonfly (8.32%), a16z (6.94%), and Multicoin Capital (5.86%), which complete the top five.
Dragonfly, which holds the third position, has made significant investments in key projects such as Avalanche (AVAX) and NEAR Protocol (NEAR), both of which have garnered considerable traction in the crypto domain.
Meanwhile, Alliance, a crypto accelerator focusing on early-stage Web3 startups, has made noteworthy investments in entities like Story Protocol (IP), Manta Network, and Pump.fun, a launchpad for meme coins on the Solana blockchain.
Andreessen Horowitz (a16z) has secured the fourth position, with investments in Coinbase, Uniswap, Celo (CELO), Compound, and Dapper Labs, the company known for CryptoKitties.
The post Crypto Venture Funding Surges to $4.9B in Q1 2025, Highest Since 2022 appeared first on Finance Newso.
