This is a segment from the Empire newsletter. To read full editions, subscribe . I’ve got a dose of optimistic news for you this morning: From a venture capital perspective, the first quarter wasn’t so bad! Preliminary data from PitchBook suggests that the quarter saw roughly $4.5 billion in VC spending, with half of that coming from Binance’s deal with Abu Dhabi’s MGX. To put that figure into context, we saw a little over $2 billion per quarter last year. If we continue at this pace — and I know it’s early to say this — we could see spending hit $18 billion. That number is still nowhere near the $33 billion raised back in 2021, but it shows that the sector’s bouncing back, and it’s not looking frothy. Back in December, PitchBook’s Robert Le told us he wouldn’t be surprised if we saw “multiple” $5 billion quarters and, clearly, we’re not too far off. He told me that part of the momentum is coming from the larger deals, $100 million or bigger, that we haven’t seen too much of so far this cycle. Source: TIE Terminal Right now the average deal size in March sits at roughly $60 million, though — looking at the chart above — that’s clearly a jump from the deal sizes we saw last year. “I think as the mega funds come back to market, we’re going to expect to see a lot of those larger deals get funded, and that’s going to really [show in the] amount of venture capital dollars being invested,” he said. There’s preliminary evidence to support that, too. Le said he’s heard that Katie Haun’s not having a hard time raising $1 billion for two new funds, which was first reported by Fortune. The interest shows that limited partners are looking to invest in some of the so-called mega funds. “Overall sentiment” is good for crypto VCs across the board, even emerging partners focused on seed or pre-seed funding. Speaking of those smaller rounds, we might be seeing more of them at the moment, but Le thinks that larger deals will pick up as companies scale; it’s just a matter of where we are in the cycle. Per TIE data, the seed stage round is currently the most active round type. It should come as absolutely no surprise that Le expects projects focused on institutions to garner the most interest right now. One thing that’s “great for startups in this space is that these institutions are more likely to partner or buy rather than build internally.” Le expects this to drive a “large chunk of venture funding” going forward. On the flipside, Le doesn’t think we’re going to see a flock to app-layer spending — anything that serves retail, he clarified. “The general view is that retail hasn’t come back to the market,” though Le admitted that this mindset might be “short-term thinking.” The “holy grail” for crypto is to integrate retail users who are using crypto apps with real-world value. They’re not going to come in just for the tokens, and some may not even interact with tokens. In fact, social media projects could potentially be the winners in the sector. Look at Farcaster, for example. Le said the project’s doing an “okay job,” but he wants to see them focus on a larger audience outside of the crypto native crowd. Given that they raised $150 million last year, he thinks they have the capital to start winning over a broader audience. Let’s start onboarding. Get the news in your inbox. Explore Blockworks newsletters: Blockworks Daily : The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam. Empire : Start your morning with the top news and analysis to inform your day in crypto. Forward Guidance : Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance. 0xResearch : Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more. Lightspeed : Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks. The Drop : For crypto collectors and traders, covering apps, games, memes and more. Supply Shock : Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.
