In 2023, while venture capital activity declined overall, funding for Bitcoin startups saw a significant increase. According to a report by Trammell Venture Partners (TVP), the number of Bitcoin-native pre-seed deals grew by 360% last year, with the total number of funded Bitcoin companies rising by 56.9%. TVP defined a “Bitcoin native company” as one whose success is tied to the Bitcoin network and operates under the belief that BTC is the future global monetary asset.
Although the total amount of venture dollars invested in Bitcoin fell by 12.5% to $305 million in 2023, the number of Bitcoin venture deals increased by 69.2%. In comparison, the crypto industry experienced a decrease of 64.5% in funding and 35.3% in deals. Despite this, the number of crypto venture deals still surpasses those of Bitcoin, albeit by a ratio of 20:1.
Notable investors in Bitcoin startups in 2023 included General Catalyst, Y Combinator, and Draper Associates, led by long-time Bitcoin advocate Tim Draper. Despite challenges faced by the broader venture capital landscape last year, TVL to X expressed optimism about the future of Bitcoin-native startups, stating that they not only endured but emerged stronger. The future for Bitcoin-native startups appears to be promising.
The surge in funding for Bitcoin startups coincided with a resurgence in developer activity on the Bitcoin network. New technological capabilities such as the NFT protocol Ordinals, the Bitcoin computing paradigm BitVM, and the upcoming “Runes” protocol have sparked innovation in the space. Developers have been exploring more efficient ways to build Bitcoin layer 2 solutions in response to rising transaction fees on the network.
As CoinMetrics co-founder Nic Carter mentioned, there has been a noticeable increase in the number of Bitcoin startups in recent times. This trend, combined with the advancements in technology and the growing interest from investors, paints a promising picture for the future of Bitcoin startups in the coming years.
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