In contrast to a general decrease in venture capital investment last year, financing for Bitcoin-related businesses experienced a significant surge, nearly quintupling, as indicated by recent data.
According to studies conducted by Trammell Venture Partners (TVP), there was a significant increase in the number of Bitcoin startups seeking funding last year. Pre-seed Bitcoin deals jumped by an impressive 360%, and the total number of funded Bitcoin companies grew by approximately 57%.
VC Funding Explodes On Bitcoin
In simpler terms, a “Bitcoin native company” refers to a business whose prosperity relies on Bitcoin’s network success and believes in Bitcoin as the leading global currency of the future. (TVP’s Friday report clarified this concept.)
Startups in their initial stage are included, while established companies, Bitcoin mining operations, and businesses primarily focused on cryptocurrencies are excluded.
In 2023, the amount of investment in Bitcoin ventures decreased by 12.5% to $305 million, but the number of deals increased by 69.2%. On the other hand, for the crypto industry as a whole, investments declined by 64.5%, and the deal count dropped by 35.3%.
The number of crypto investment deals is approximately twenty times greater than that of Bitcoin deals. However, the increase in Bitcoin investments last year was significant. Notable investors from 2021 include General Catalyst, Y Combinator, and Draper Associates, led by Bitcoin advocate Tim Draper.
In spite of the turbulent conditions in the venture capital industry during the year 2023, the sector specialized in Bitcoin-based startups not only survived but thrived. According to TVL’s recent communication to X, optimism prevails for the future prosperity of these Bitcoin-native businesses.
Rise In Bitcoin Development
Over the past year, a significant increase in funding has occurred hand in hand with a resurgence of developer interest in Bitcoin. This renewed activity was ignited by recent technological breakthroughs uncovered on the network. Among these innovations are the NFT protocol Ordinals, the computing model for Bitcoin called BitVM, and the forthcoming “Runes” protocol – enabling the creation of efficient tokens directly on Bitcoin.
This week, the pace of ordinal activities and the average transaction cost on Bitcoin picked up again. The increasing transaction fees have led developers to explore more productive methods for enhancing Bitcoin’s layer 2 solutions, with a growing focus on facilitating smoother transfers. Funding is also shifting towards these projects.
In his remarks on Friday, Nic Carter of CoinMetrics shared his personal experience, expressing that he has never encountered more Bitcoin startups during his professional tenure. The current rate is reportedly significantly faster than previously observed.
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2024-04-15 04:13