Growth in Bitcoin-Native Startups Despite Decline in Venture Capital Investment

Growth in Pre-Seed and Early-Stage Investments

A new report by Trammell Venture Partners (TVP) has revealed that the number of Bitcoin-native startups receiving venture capital investment increased in 2024, despite a decline in the total capital allocated to the sector.

The report highlighted that the number of unique Bitcoin-native companies funded rose 27.5% on a yearly basis, while the number of individual transactions grew 31.8%. However, the total amount of capital raised across those deals fell 22.1% compared to 2023, totaling $234 million for the year.

The report focused on early-stage Bitcoin-native software startups, excluding mining operations and atypically large or late-stage funding rounds. TVP defined a “Bitcoin-native” company as one founded on the principle that Bitcoin serves as a foundational global monetary asset and digital cash, with business models aligned to the Bitcoin protocol stack.

This emerging category includes startups building infrastructure, applications, and services that leverage the base Bitcoin network or related layers.

Increased Activity in Earlier-Stage Funding Rounds

The increase in deal count was driven by heightened activity in earlier-stage funding rounds. Pre-seed transactions grew by 50%, while seed-stage deals rose by 30%. Series A transactions also saw a notable 60% increase year over year.

This suggests growing interest among investors in backing Bitcoin-native companies from their earliest phases of development despite broader market caution in crypto venture capital.

Shift in Market Trends

The divergence between the increased startup funding and lower capital allocation indicates a shift in market trends. Venture firms are spreading investments across a wider range of early-stage companies, potentially favoring leaner rounds and valuation discipline over large, concentrated bets.

The median round sizes remained stable across funding stages, though the aggregate capital raised dropped from $301 million in 2023 to $234 million in 2024.

Consistent Rise in Early-Stage Deal Activity

Pre-seed Bitcoin-native transactions increased by more than sevenfold over the four years from 2021 to 2024. The consistent rise in early-stage deal activity positions Bitcoin-native startups as a distinct and increasingly active segment within the broader crypto investment landscape.

Small but Growing

Although Bitcoin-native startups remain a small portion of the total venture capital funding in the market, they have shown relatively higher momentum. According to TVP, these startups represented 5.98% of overall crypto venture capital invested in 2024 and 2.34% of all venture-backed crypto deal counts.

This compares to Bitcoin’s massive share of the total crypto market cap, which currently stands above 62%. The disparity highlights a continued gap between Bitcoin’s market dominance and its representation in startup investment flows.

Conclusion

The Bitcoin-native sector is entering a breakout phase, with four consecutive years of growth across key investment metrics. The report highlights the resilience of the sector, with a consistent rise in early-stage deal activity and increased investor interest in backing Bitcoin-native companies from their earliest phases of development.

FAQs

Q: What did the report by Trammell Venture Partners (TVP) reveal about Bitcoin-native startups?

A: The report revealed that the number of Bitcoin-native startups receiving venture capital investment increased in 2024, despite a decline in the total capital allocated to the sector.

Q: What was the growth rate of unique Bitcoin-native companies funded in 2024 compared to 2023?

A: The growth rate was 27.5%.

Q: What was the growth rate of individual transactions in 2024 compared to 2023?

A: The growth rate was 31.8%.

Q: What was the total amount of capital raised across Bitcoin-native deals in 2024?

A: The total amount was $234 million.

Q: What defines a “Bitcoin-native” company according to TVP?

A: A “Bitcoin-native” company is one founded on the principle that Bitcoin serves as a foundational global monetary asset and digital cash, with business models aligned to the Bitcoin protocol stack.

Q: What is the estimated share of Bitcoin-native startups in overall crypto venture capital invested in 2024?

A: The estimated share is 5.98%.

Q: What is the estimated share of Bitcoin-native startups in all venture-backed crypto deal counts in 2024?

A: The estimated share is 2.34%.