Since March 2024, the cryptocurrency market has experienced a significant pullback, with the prices of most altcoins (excluding BTC, ETH, and other tokens) dropping by over 50%, especially for some relatively mainstream altcoins. However, this has not had a significant impact on newly listed tokens. Through the study of over 2000 token issuance cases, we found that projects in the early stages with a financing scale in the millions of dollars can maintain a stable price for their native tokens and chart an independent trend from the overall market.

Summary Points

· In the private sale market of Web3, the investment scale of Pre-Seed and Seed rounds is around a million dollars, and projects that have a longer fundraising process will have a longer time interval for the next round of financing and receive less funding.

· Based on our observation of the market from January to April, we found that the investment and financing market has a lagging response to the rise and fall of the overall market, which means that a large amount of investment and financing will emerge one month after a significant rise in the overall market.

· This year, the public sale dominated the token issuance, accounting for 81% of all token issuances from the beginning of the year to date. Not a single project in the private sale track can outnumber the projects in the public sale track, indicating the strong preference of the market for public sales.

· Due to the significant differences in valuation data at different stages of the project’s financing and the subjective bias in the disclosure of information, it is impossible to draw meaningful conclusions from them.

Financing Scale and Track Maturity

Web3 itself is not an industry, but a technology stack that is changing the entire industry. At the same time, there are no two identical tracks in Web3. The founders have different backgrounds, and the blockchain solutions provided by the projects are different. Therefore, each track of Web3 has different capital requirements. In order to make it clearer to everyone the capital requirements of each track, we will combine the financing scale with the financing stages of each track, with the time interval from the beginning of 2024 to August 11th, and then obtain a chart:

· X-axis: The stage in which the project is raising funds.

· Y axis: The average financing amount of the project.

· Bubbles: The size of the bubbles represents the number of project financings.

The diagonal line from bottom left to top right divides the yellow and blue areas, with blue representing the less financing-intensive track and yellow representing the capital-intensive track.

2024 financing stages and scale chart for each track

Token Financing

Based on the data from the beginning of the year to August 11th, we have studied a total of 375 projects. These projects either follow the Token issuance model combining public and private, or they raise funds using non-stable coins.

Over the past year, a total of 375 tokens have been listed in the cryptocurrency market, with 70 of them being through private sale and 305 through public sale. By creating a chart of the number of token listings and the rise and fall of altcoin market cap, we can see that there is a positive correlation between the number of token listings and the rise in altcoin market cap. When the altcoin market cap is in a pump trend, the number of token listings will sharply rise in the following month. In the past few months, due to the increase in holidays and poor market performance, there has been a decrease in activity.

Comparison chart of Token Listing Quantity and Altcoin Market Cap Change

Upon further observation, we found that not only does the number of Token listings correlate with the fluctuations in Altcoin Market Cap, but also the number of Tokens listed through private sale is positively correlated with market fluctuations. We believe this is expected, as public issuance usually requires the project party to make more preparations, and a long preparation time may lead to missing out on the market.

Comparison chart of the number of Tokenissuance activities and the monthly increase in Altcoin Market Cap

We also analyzed the way the project is financed. Among the newly listed Tokens, about 81% are sold publicly, and so far, no private sale in any track has exceeded the public sale this year.

On the X axis, with the middle as the dividing line, you see private sale on the left and public sale on the right. The Y axis displays the median financing amount, and the size of the bubbles represents the number of Tokens listed.

There are 82 gaming projects, 44 exchange projects, 19 Decentralized Finance revenue protocols, and 19 Metaverse projects, which account for the majority of this year’s Tokenissuance projects across these four tracks.

The median relative share and financing amount of public sale and private sale Tokenissuance

Traditional Venture Capital

We studied 1919 financings and analyzed the data for each financing stage. The conclusions drawn include:

· Seed round is the most active financing stage, followed by accelerator and Pre-Seed round. With the listing of Tokens, the gap between Pre-Seed and Seed rounds is narrowing.

· As the cycle heats up, more and more ecosystems emerge, accelerating the number of projects hatched by accelerators.

Since 2024, we have calculated the average financing scale for each stage: Pre-Seed round $2.2 million, Seed round $4.9 million, Series A $19.8 million, Series B $51 million.

We will carefully study these numbers below. We found that the seed round is the most active stage of financing, followed by the Pre-Seed round. Interestingly, we found that there are fewer and fewer companies that distinguish the financing stage into these two rounds, because sometimes the seed round is replaced by PE Round.

Next, we noticed that there are many accelerator incubation programs. According to our observations, these incubation programs have risen compared to last year. This year, we have seen the emergence of many emerging accelerators in Web3. However, there is one issue with the data, which is the amount of subsidies. I believe that the actual numbers obtained by the incubation projects are an order of magnitude larger than the reported numbers. Therefore, subsidies should not be considered as financing.

Different financing stages and quantities since the beginning of the year

Marking the financing amount data, we get the following figure. The project party’s choice not to disclose the financing amount is actually relatively common, but if the data sample is large enough, the missing data can be inferred.

As shown below, the gray area is the inferred data. In order to eliminate the huge impact of outliers, we adopt a conservative method to calculate the total by mixing the median and mean.

The total amount of funds raised at different stages.

Using the above two charts, we further calculated the approximate value of the average financing amount for each stage from the beginning of the year to the present, that is, the simple total financing amount divided by the number of financings. Although the results obtained are not precise enough, they are consistent with the analysis recommendations we provide to our peers.

Average financing amount at each stage of trading

Finally, we studied the changes in the financing scale of Pre-Seed round, seed round, and Series A round over time. From the data, although the market is turbulent, the scale of Pre-Seed round financing and seed round financing is less affected by the market, because these early-stage projects focus on innovative areas.

In contrast, Series A is closer to or at the TGE stage, and requires the project party to prove the attractiveness of its product. Market pullback typically has a greater impact on later-stage investments, leading to a decrease in both financing activities and scale, as was the case in 2022.

The early increase in the scale of financing in the early part of this year (since January 2024) may be due to investors’ belief that the market is transitioning from the late stage of turbulence to the early stage of recovery, so the investment and financing market is booming at the beginning of the year.

Compared with January, the chart shows changes in the financing scale of each stage.

Data Adjustment

Key Information:

· Token listings usually coincide with seed rounds, Series A rounds, and strategic rounds of financing.

· The most common financing combination in a short period of time is accelerator + seed round. Many people join new project plans or complete new financing shortly after joining the project.

We have reported all the financing data of the Cryptocurrency industry from early 2024 to the present. However, there have been some issues in the data collection process, which will be explained next.

In our data, there are 1392 companies that simultaneously register their financing information in multiple channels, and there are two situations:

The company has undergone multiple rounds of financing within a year.

· The company simultaneously conducted traditional venture capital and on-chain Token financing.

Here are some of the most common financing combinations. The most common one is accelerator and seed round, which makes sense because accelerator incubation programs help drop the risk of the project party’s business model, and the project party typically chooses to join the accelerator when preparing for pre-seed or seed round financing. We also see public sale Token round financing happening simultaneously with strategic or seed round financing, usually during or before the TGE. In addition, only four companies completed both seed round and A round financing this year.

Various financing schemes and the quantities used

We emphasize these trends to tell project founders that non-traditional financing structures are not uncommon, and we highly recommend founders to combine traditional equity and Token for financing.

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