Small unripe paw paw fruit frequently falls off, sometimes even into Summer. They tend to hold onto fruit better after the first two or three flowering seasons; in fact mine usually don't ripen fruit the first season they flower. I've never known any animal to eat unripe paw paws, so I think you just had fruit drop. My experience with bagging paw paw fruit was mixed. I tried it on fruit that was nearing ripening to keep the raccoons from getting it, but they tore at the bags and punctured the fruit with their claws through the bags when they couldn't get it out.

Seems like it could have definitely been fruit drop. I suppose I'll cross my fingers and hope for the best this year.

Bagging may have a role, but for the purpose of preventing ripe fruit from falling and getting damaged, if the bags are secured to the tree. At a certain point though, it's probably not worth the effort or expense - the windfalls can be pulped and frozen so not a complete loss.

If your small tree sets multiple fruit in a cluster, you might want to snip off all but one when still small. I have had squirrels knock down 1", 2", and 3" paw paws leaving them on the ground with a few teeth marks, so as for when to bag them to keep them uninteresting to squirrels, it is your call. For me, I wait until the fruit are maybe half grown before bagging them, or until the squirrels start knocking them down repeatedly. I have used tan colored plastic grocery bags with the loop handles pulled over the fruit branch and tied into a somewhat loose knot. After more than 100 bags enclosing fruit over 2 years, not even one bag was torn up by a critter to reach the fruit. Not by squirrels, possums, raccoons, crows, wasps, woodpeckers, etc. If I only had a few precious fruit to protect and I suspected that coons or possums were around to threaten them, I would probably take it a step further and spray the bag every now and then with some stinky poison like ant and roach aerosol to further dissuade them. If you are eager to see your young tree become a fruit maker, you might want to mulch it with decaying leaves, keep it weed free, fertilize regularly, and keep the soil moist continually.