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The blockchain startup landscape is bright and growing as 2024 progresses, creating numerous opportunities for founders and inventors to raise funds. Venture capitalists and other funding sources continue to work hard to support investments in blockchain technology products, even in a challenging economic climate.
This article presents findings about the current state of funding and highlights major participants who influence this landscape in securing financing for blockchain-based startups.
Venture capital investment in blockchain startups reached approximately US$8 billion in 2023 through various deals. The trend continues into 2024. In Q3 2024 alone, venture capitalists invested a total of US$2.4 billion into crypto and blockchain-focused startups across 478 deals, which slightly decreased from the previous quarter but is still showing robust interest in the sector. The deals represent about 85% of the total amount invested.
Early-stage investments: Most of the investments are seen in early-stage companies, usually considered to be higher in risk but with more possible returns. Investors sought a unique value proposition or disruptive technology.
Sector-specific investment: It has been absorbed by Layer 1 blockchain projects, DeFi projects, gaming companies, and infrastructure companies. For instance, in the Web3 segment, Farcaster bagged $150 million in funding, while Zentry took home $140 million.
Geographic Distribution: The US is still leading the investments in blockchain, with a 56% share in Q3 2024. The US remains the most innovative hub while also being quite an active location for venture capital's activities about blockchain.
Some entities and funds focus on blockchain startups especially:
Coinbase Ventures: In favour of early-stage crypto ventures, Coinbase Ventures has invested over US$1 billion in a variety of startups so far. It focuses on financial and strategic equity to make the scale possible for startups.
Blockchain Founders Fund: An incubator for Web3 which supports at any stage several Web3 start-ups and offers funding up to 120k euros that accompany mentorship and resources along with that.
Base Camp accelerator programme by Outlier Ventures, which funds equity as a trade-off for sharing resources and support to develop the business model and strategic approach to fundraising.
Tenity: An accelerator that assists early-stage Web3 ventures with mentorship and grants to bring innovative ideas into the market.
Many blockchain platforms have a grant program that can fund development projects. Casper Grant Program, for example, provides US$25 million in funding to projects that help improve its ecosystem's infrastructure.
Other platforms such as Solana and Algorand provide grants to promote innovation in their respective networks.
For blockchain startups that hope to succeed in this competitive space, there are a few strategies that may enhance the chances of success:
Clearly articulate how your project addresses a specific problem or need in the market. Investors will be more likely to invest in projects that show potential for impact and profitability.
Attend industry events, conferences, and meetups. This helps you get in touch with your potential investors and mentors. It will also help build some good connections within the blockchain community that will lead to introductions and partnerships.
This also means being well-prepared with a structured and detailed proposal in applying for grants or pitching to investors. In the proposals, there should be an objective, detailed project plan, a budget outline, and also proof of market demand.
Other online platforms, such as Gitcoin, allow developers to raise funds through community-driven grants based on the amount of contribution to open-source projects.
Taking part in these platforms gives your startup another level of visibility.
Despite unstable investment levels, the funding landscape for blockchain startups looks promising as we move into 2024. This landscape offers many opportunities for innovative projects that need financial backing, with a strong focus on early-stage ventures in specific sectors like DeFi and gaming.
A variety of funding sources are available to entrepreneurs, including venture capital firms, accelerator programs, grants, and others. These sources help them secure the resources needed for growth.
With the right value proposition and navigation of funding ecosystems, blockchain startups can succeed in this fast-moving industry. Tracking market trends and funding opportunities will be key for any startup aiming to thrive in the blockchain space in 2024.
