The number of Bitcoin-focused startups securing venture capital funding saw an increase in 2024, even as the total investment in the sector declined, as outlined in a recent analysis.
The findings revealed a 27.5% rise in the number of distinct Bitcoin-centric companies receiving funding year-over-year, with individual transactions climbing by 31.8%. However, the aggregate amount of capital raised through these deals dropped by 22.1% compared to 2023, totaling $234 million over the year.
This study concentrated on early-stage Bitcoin-specific software startups, deliberately leaving out mining operations and unusually large or late-stage funding rounds.
A "Bitcoin-native" company is defined as one that is built upon the concept of Bitcoin as a fundamental global monetary asset and digital currency, with business models that align with the Bitcoin protocol stack.
This emerging sector includes firms that are developing infrastructure, applications, and services that utilize the base Bitcoin network or related layers.
Increase in Pre-Seed and Early-Stage Investments
The rise in the number of deals was fueled by increased activity in earlier-stage funding rounds. Pre-seed transactions surged by 50%, while seed-stage investments grew by 30%. Notably, Series A deals experienced a significant year-over-year increase of 60%. This indicates a growing interest from investors in supporting Bitcoin-native companies from their initial development stages, despite a general sense of caution in the crypto venture capital market.
The discrepancy between increased funding for startups and reduced overall capital allocation points to a shift in market dynamics. Venture firms appear to be diversifying their investments across a broader array of early-stage businesses, potentially favoring smaller rounds and more disciplined valuations rather than concentrating on large, focused bets.
According to the analysis, median round sizes remained consistent across funding stages; however, the total capital raised decreased from $301 million in 2023 to $234 million in 2024. Pre-seed Bitcoin-related transactions saw more than a sevenfold increase between 2021 and 2024.
The ongoing rise in early-stage deal activity positions Bitcoin-native startups as a distinctive and rapidly expanding segment within the overall crypto investment landscape.
Small but Expanding
While Bitcoin-native startups continue to represent a minor portion of total venture capital investments, they have demonstrated relatively stronger growth. These companies accounted for 5.98% of the overall crypto venture capital invested in 2024 and 2.34% of all venture-backed crypto transactions.
This is notable when compared to Bitcoin’s substantial share of the total cryptocurrency market capitalization, which currently exceeds 62%. This contrast underscores an ongoing gap between Bitcoin’s market dominance and its representation within startup funding flows.
The analysis posits that the Bitcoin-native sector is entering a critical growth phase, having experienced four consecutive years of upward movement in key investment indicators.
Additionally, it highlighted that entrepreneurs focused on Bitcoin are increasingly capturing the attention of prominent investors, such as Founders Fund, Ribbit Capital, Accomplice, Valor Equity Partners, Boost VC, Plug and Play, Village Global, GSR Ventures, and Y Combinator, all of whom participated in Bitcoin-native funding syndicates in 2024.
Despite a contraction in overall venture capital funding for crypto over the past two years, the Bitcoin-native segment has shown resilience, marked by sustained growth in startup formation and access to early-stage capital.
The rise in the number of Bitcoin-centric startups receiving funding in 2024, even in the face of a decline in overall capital raised, reflects a growing investor interest in this category and a trend toward earlier-stage investments.