The landscape of pre-seed funding in Bitcoin startups is undergoing significant transformation, marking a substantial increase from previous years. A report from Trammell Venture Partners (TVP) reveals that pre-seed funding rounds for Bitcoin companies have surged by an impressive 767% since 2021.
As of 2024, Bitcoin pre-seed transactions have seen a 50% increase year-over-year, alongside a 27.5% increase in the number of startups receiving funding. Christopher Calicott, managing director at TVP, attributes this growth to the robust security and reliability of the Bitcoin network. He remarked, “Many entrepreneurs across crypto are revisiting the Bitcoin stack as the long-term place to build their companies. It makes perfect sense: The objectively most secure, reliable, and decentralized blockchain is the obvious platform of choice.” However, despite the rise in the number of deals, the amount of capital raised in these rounds has witnessed a decline of over 22% in 2024. This trend presents a paradox in the Bitcoin startup ecosystem.
Median valuations for pre-seed Bitcoin startups fail to reclaim 2021 levels. Source: Trammell Venture Partners
While the value of funding rounds has regained some ground in 2024, it has not reached the peaks achieved during the 2021 bull cycle, primarily due to regulatory uncertainties surrounding cryptocurrency in the United States, particularly under prior Securities and Exchange Commission (SEC) leadership. These unclear regulations have hindered the potential for robust growth in the sector, leading to decreased investor confidence.
Additionally, macroeconomic factors such as fears of a prolonged trade war, high interest rates, and the possibility of a recession in the U.S. have further dampened risk appetite for speculative assets such as cryptocurrencies.
Total number of funding deals and unique Bitcoin startup companies has steadily risen since 2021. Source: Trammell Venture Partners
Anticipating the Future: Insights from Industry Experts
Looking ahead, some experts express caution regarding the outlook for VC funding in the coming years. In January, Deng Chao, CEO of HashKey Capital, indicated that favorable pro-crypto regulations in the U.S. could enhance VC investment in 2025. However, he warned that ongoing macroeconomic instability and geopolitical issues could exacerbate market volatility, hindering positive trends.
Recent events, such as President Trump’s establishment of a 10% baseline tariff order on imported goods, have already sent ripples through the markets, highlighting the fragility of the current economic climate. Risk-on assets like cryptocurrencies typically struggle amid trade wars and economic uncertainty, prompting investors to shift to safer alternatives.
Moreover, Haun Ventures, which invested $1.5 billion in crypto firms in 2022, has announced plans to raise only $1 billion in early 2025, reflecting a cautious approach given the changing market landscape. Analysts at Galaxy Digital predict a 50% rise in VC-led crypto investments in 2025 but concur that funding will not reach the extraordinary levels seen in 2021-2022.
In summary, while the Bitcoin startup ecosystem is experiencing significant activity in terms of new funding deals, the overall capital landscape remains challenged by regulatory and macroeconomic factors. Investors and entrepreneurs alike must navigate this complex environment with care as they strive for opportunity in the evolving crypto landscape.
