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02/10/24
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Resilience Amidst Volatility: 80% of 2022 Crypto Startups Thrive Despite Market Turmoil
A recent report reveals that over 80% of early-stage startups that secured funding in 2022 remain operational, despite the tumultuous conditions in the cryptocurrency market marked by notable collapses. Analysts from Lattice Fund highlight that among more than 1,200 crypto startups that collectively raised around $5 billion last year, approximately 76% successfully launched products on the mainnet, while around 18.5% are no longer active or have shut down.
Among these startups, Eigenlayer, an Ethereum re-staking protocol, is cited as a significant success. However, its accomplishment in executing an effective go-to-market strategy and developing a product valued in the billions is exceptional compared to its peers from the same year. Just 1.5% of all startups achieved what is termed “Product Market Fit,” with only 12% successfully securing additional funding rounds.
Investment trends indicate that the infrastructure and centralized finance (CeFi) sectors have shown the strongest performance, with a commendable 80% of CeFi projects and 78% of infrastructure projects successfully launching products. In contrast, sectors like gaming and the metaverse faced substantial challenges, displaying the highest failure rates.
Ethereum continues to be the preferred ecosystem for new projects, with $1.4 billion invested across 314 Ethereum-based initiatives, of which 18% failed over the long term. Notably, all 18 Bitcoin-based startups that raised funding remain active and are continuing their development. The situation for Solana is more challenging; despite having attracted $350 million for 87 projects, external factors such as the collapse of FTX led to a 26% failure rate for these initiatives.
Looking ahead, analysts suggest that the current “2022 vintage” of startups may face even tougher conditions than those from 2021. A stagnant market coupled with a surge in seed-stage startups and a constrained token launch environment will likely impede many teams in achieving their goals and delivering returns to investors. Investors have begun focusing on emerging sectors and ecosystems, indicating a shift in attention towards what future trends may emerge in the next one to two years.
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