Crypto’s Revival Has Been a Boon for Startups

In this year’s first quarter, venture investments rose to $2.4 billion, up from $1.9 billion raised in the fourth quarter of 2023.

Image Credit: iStock, Chinnapong

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Despite the occasional meltdown and implosion, the crypto market is very much alive and thriving, with the sector’s recent revival pushing total startup investment above the $100 billion mark. 

Decentralized Gold

Wait, is that gray? Crypto, for all its underground futuristic beginnings, is kind of a grownup now. BlackRock, the world’s largest asset manager, provides investors with crypto trading options while El Salvador has adopted Bitcoin as legal tender. 

Will it eventually replace our dollars, pounds, and rupees? Meh, maybe not, especially when part of the story includes hackers stealing more than $19 billion in crypto since 2013 and catastrophes like the destruction of exchange FTX, due to founder Sam Bankman-Fried’s fraudulent activity. But that doesn’t mean crypto is down for the count:

  • Since 2014, crypto startups have raised roughly $101.5 billion, according to data collected by DefiLlama. One of the biggest hauls came in 2018 when Block.one raised $4 billion in a yearlong initial coin offering to support its eos.ios blockchain platform.
  • In March, Bitcoin reached an all-time high valuation of nearly $74,000. Though not quite as high-flying, Ethereum has managed to return to roughly $3,600, more than doubling in the last year.

No Way Out, No Problem: Investors would love the ability to exit their crypto investments via public offerings or blockbuster M&A deals to maximize their returns, but that hasn’t really been happening. Paul Verdaittakit of Pantera Capital told Bloomberg that exits have been limited in the past few years aside from a few trade sales — which don’t have the most ideal payouts — as well as Coinbase Global’s $86 billion direct listing on Nasdaq in 2021.

However, the lackluster exit environment doesn’t seem to worry investors all that much. In this year’s first quarter, crypto venture investments rose to $2.4 billion, a nice jump from just $1.9 billion raised in the fourth quarter of 2023, according to PitchBook. In March, AI software firm Together AI raised $106 million led by Salesforce. While crypto has had its newsworthy struggles, many investors can’t ignore an asset class that has the potential to double in value in less than a year.