As the crypto venture capital landscape stages a recovery, investors are showing a preference for more liquid and growth-ready startup opportunities. Despite improvements in market conditions, industry experts note that capital availability is still more constrained compared to the previous bullish cycle.
In 2024, investors are placing emphasis on compelling narratives and robust metrics when considering investment opportunities. Venture funds are particularly keen on liquid or pre-launch opportunities in startups. Carlos Pereira, a partner at BitKraft Ventures, highlights the expectation of a divergence between public and private markets, indicating that capital may not be as abundant for venture capital deals.
BitKraft Ventures, having raised $220.6 million for its second token fund in 2023, anticipates deploying the capital in the information technology and gaming sectors. Pereira notes the strength of the Web3 gaming segment, which has shown positive activity in the Q4 2023 recovery, and he emphasizes the gaming industry’s significant $330 billion market.
Despite positive prospects, startups, especially those in the early stages, may face challenges. Adam Struck, founder of VC firm Struck Capital, suggests that funds are seeking businesses with proven models poised for growth. Struck anticipates a favorable year for the gaming industry and decentralized finance (DeFi), expecting increased institutional capital inflow into these spaces.
Data from DefiLlama indicates that at least $5.7 billion in capital was allocated to crypto businesses in 2023. Lolli, a crypto startup offering Bitcoin and cashback rewards through retailers, secured funding in an $8 million Series B round led by Bitkraft Ventures. Lolli’s CEO, Alex Adelman, believes that startups can thrive in the current environment, and he advises caution in raising excessive or overly costly funding. Adelman encourages strategic fundraising in 2024, emphasizing the importance of bringing in only the necessary capital for the next phase of growth to avoid unsustainable spending habits and dilution of equity shares.