Over 80% of 2022 Crypto Startups Are Still Active Despite Market Challenges
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On October 1, a report showed that over 80% of crypto startups that raised funds in 2022 are still active despite the turbulence in the crypto market. This is notable considering the numerous high-profile failures in the crypto sector during that period. The report analyzed over 1,200 early-stage startups, which collectively raised around $5 billion in funding.
Strong Performance in a Tough Year
According to the Lattice Fund report, about 76% of these startups managed to launch products on the mainnet.
However, 18.5% of the projects either shut down or went inactive. Only a small fraction around 1.5%, managed to achieve “Product Market Fit,” where their offerings successfully met the demands of the market. Also, only 12% were able to secure follow-on funding rounds.
Over 80% of startups from 2022 are still active, despite the market ups and downs.
A report says 76% have launched their products successfully.
It shows how strong and innovative this space is!— Crypto Miners (@CryptoMiners_Co) October 2, 2024
Some sectors have performed better than others. The infrastructure and centralized finance (CeFi) segments have seen the most success, with 80% of CeFi and 78% of infrastructure projects bringing their products to the mainnet. Gaming and the metaverse, however, fared poorly.
Lattice Fund co-founder Regan Bozman noted, “Chasing big stories can get you down. The initial investment in blockchain games amounted to $700 million, but games and metaverses have not shown much activity in most cases.”
7/ Chasing narratives can get you rekt
$700M went into gaming seeds rounds but Gaming & Metaverse had some of the highest fail rates and likelihood to be active without anything shipped
— Regan Bozman (@reganbozman) October 1, 2024
Notably, Ethereum was the top layer-1 ecosystem for crypto startups in 2022, attracting $1.4 billion in funding across 314 projects. But 18% of these startups failed to continue operations.
Bitcoin-based projects demonstrated the highest resilience, with all 18 startups that raised funds still active and developing today. This aligns with experts’ opinions, such as that of Robert Kiyosaki, who advocated for increased investment in Bitcoin.
The Solana ecosystem, which attracted $350 million across 87 projects, faced difficulties due to external events, such as the collapse of FTX and a steep drop in the price of the native SOL token.
As a result, 26% of Solana-based startups failed to continue operations. Other networks, like Near, StarkNet, and Flow, struggled to raise additional rounds of funding.
Challenges for 2022 Vintage Startups
Despite the promising performance of many 2022 startups, the report suggests that these projects face a tougher landscape compared to the 2021 cohort.
The market is currently stagnant, with limited new retail participation, making it harder for projects to find their product-market fit.
Furthermore, a growing number of new seed-stage startups and a tighter token launch market mean more teams will struggle to bring tokens to market and provide returns for their investors.
Additionally, investors have shifted focus to newer sectors, such as decentralized physical infrastructure networks (DePIN) and artificial intelligence (AI), as well as emerging ecosystems like Base and Monad.
This shift in investor interest means that 2022 projects will need to innovate and adapt if they hope to remain competitive in the current market environment.
