The Explosive Growth of Bitcoin-Native Startups: TVP Report Reveals 767% Increase Since 2021

The Explosive Growth of Bitcoin-Native Startups: TVP Report Reveals 767% Increase Since 2021

TLDR

• Bitcoin-native startups saw a 767% increase in pre-seed transactions since 2021
• Total funding reached $1.2 billion from 2021-2024, though 2024 saw a 22.1% dip to $234 million
• Number of funded startups increased 27.5% and pre-seed transactions jumped 50% in 2024
• Bitcoin startups receive only 2.34% of crypto venture dollars despite Bitcoin’s 63% market dominance
• Major investors including Founders Fund and Y Combinator participated in Bitcoin-native deals in 2024

Bitcoin startups are experiencing a remarkable surge in early-stage funding according to a new report by Trammell Venture Partners (TVP).

The Austin-based venture capital firm released its third annual report on the Bitcoin venture capital landscape, revealing striking growth in the sector.

The report shows that Bitcoin-native pre-seed transactions have increased by 767% since 2021. TVP defines “Bitcoin-native” as startups “founded with the first principle that bitcoin is the global monetary asset of the future and Internet-native digital cash.”

Over the four-year period from 2021 to 2024, these Bitcoin-focused startups raised approximately $1.2 billion. This growth represents a major shift in how venture capital is approaching the oldest cryptocurrency’s ecosystem.

Funding Trends Show Mixed Signals

Despite the overall positive trend, 2024 saw total capital raised drop to $234 million, a 22.1% decrease from 2023’s $301 million. This marks the lowest annual total for the 2021-2024 timeframe covered in the report.

However, other metrics paint a more optimistic picture. The number of funded startups grew by 27.5% in 2024. Pre-seed transactions jumped even more, increasing by 50%.

Series A transactions saw the largest growth, with a 60% increase in 2024 compared to the previous year. This suggests investors are more willing to follow on with larger investments for promising Bitcoin startups.

The divergence between increased startup funding and lower capital allocation points to a market shift. Venture firms appear to be spreading investments across more early-stage companies while maintaining smaller round sizes.

Median round sizes remained stable across funding stages according to the report. This indicates that while more companies are getting funded, they’re receiving similar amounts per deal.

Bitcoin’s Investment Gap

Perhaps the most striking finding is Bitcoin’s small share of overall crypto venture capital. Despite Bitcoin representing 63% of the total cryptocurrency market capitalization, it receives just 2.34% of all crypto venture dollars invested.

This disparity highlights a potential opportunity for growth. Christopher Calicott, managing director at TVP, sees this gap as promising rather than concerning.

“Many entrepreneurs across crypto are revisiting the Bitcoin stack as the long-term place to build their companies,” said Calicott. “It makes perfect sense. The objectively most secure, reliable, and decentralized blockchain is the obvious platform of choice.”

Calicott added,

“As this wave of early-stage companies finds traction, increasing amounts of crypto value will accrue to the Bitcoin stack, a core thesis for TVP.”

The report excluded Bitcoin mining operations and atypically large or late-stage funding rounds. It focused specifically on software startups building on the Bitcoin protocol stack.

Examples of Bitcoin-native startups in TVP’s portfolio include Voltage, which specializes in Lightning Network infrastructure, and Fedi, a Bitcoin superapp that combines chat, money, and other social features.

Interest from major investors is growing. The report noted that prominent firms including Founders Fund, Ribbit Capital, Accomplice, Valor Equity Partners, Boost VC, Plug and Play, Village Global, GSR Ventures, and Y Combinator all participated in Bitcoin-native deals in 2024.

While overall venture capital allocations to crypto have contracted over the past two years, the Bitcoin-native segment has shown resilience. The consistent growth in startup formation and early-stage capital access suggests this sector is entering a breakout phase.

The raw data behind the 767% increase figure is proprietary, according to Calicott. “We’ve not been putting the raw data from our data set out, other than in summary statistics,” he explained when contacted by Bitcoin.com.

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