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Investor focus shifts toward liquid and growth-ready startups amid crypto venture capital recovery

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TL;DR

  • Investors favor liquid startups in 2024, but funds are scarcer, possibly leading to a market split.
  • BitKraft Ventures raised $220.6 million for gaming investments.
  • Startups should avoid excess capital, focus on sustainability, and secure strategic funds for growth in 2024.

As the crypto venture capital landscape gradually rebounds, investors prefer more liquid and growth-ready startup opportunities. Although the market outlook seems promising for venture funds and startups seeking capital, industry experts caution that funds may not be as abundant as during the previous bull cycle. 

This shift in investor interest may lead to a divergence between public and private markets, where public markets, consisting of stocks, bonds, and securities, continue to attract investments. In contrast, private markets, including venture capital funds, might experience a decrease in available funding.

BitKraft Ventures raises $220.6M for second token fund

BitKraft Ventures, a prominent player in the venture capital arena, raised $220.6 million for its second token fund in 2023, slightly below its initial target of $240 million, as reported by records from the Securities and Exchange Commission. 

This capital is expected to be deployed primarily in the information technology and gaming sectors. Carlos Pereira, a partner at BitKraft Ventures, noted that the web3 gaming segment has witnessed significant growth in the fourth quarter of 2023, with positive launch activity expected to continue into 2024. Pereira emphasized that the gaming industry represents a substantial $330 billion market.

Despite the positive outlook for venture capital, early-stage startups may still encounter challenges. According to Adam Struck, founder of VC firm Struck Capital, investors are increasingly inclined to support businesses with proven models that are poised for growth in the near future. 

Struck believes that the Series A and growth stage fundraising markets will gradually thaw following the frenzied investment activity of 2021. He also predicts a prosperous year for the gaming industry and the decentralized finance (DeFi) sector, driven by the influx of institutional capital into blockchain-based assets.

DeFi growth and crypto funding

Data from DefiLlama reveals that a substantial $5.7 billion in capital was allocated to crypto businesses in 2023. The growing interest in DeFi has been instrumental in attracting investment to the crypto space. As traditional assets migrate onto blockchain networks, the total value locked in DeFi is expected to experience substantial growth in 2024.

One notable example of a crypto startup that successfully secured funding in 2023 is Lolli. The company offers shoppers Bitcoin and cash-back rewards through partnerships with retailers such as Ulta Beauty, Groupon, and Booking.com. Bitkraft Ventures led an $8 million Series B funding round for Lolli, with participation from backers like Serena Williams’ Serena Ventures. Lolli’s CEO, Alex Adelman, expressed optimism for startups in the current environment, emphasizing the importance of sustainable business models.

Adelman’s advice for startups in 2024

Adelman advises startups seeking funding in 2024 to exercise caution when raising capital. He highlights the potential pitfalls of excessive or overly costly funding, cautioning that while a surplus of capital may seem advantageous in the short term, it can lead to unsustainable spending habits, future down rounds, misalignment with investors, and equity dilution for key stakeholders. Adelman recommends that startups adopt a strategic approach by securing only the necessary funding to reach their next growth phase.

Disclaimer: The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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Benson Mawira

Benson is a blockchain reporter who has delved into industry news, on-chain analysis, non-fungible tokens (NFTs), Artificial Intelligence (AI), etc.His area of expertise is the cryptocurrency markets, fundamental and technical analysis.With his insightful coverage of everything in Financial Technologies, Benson has garnered a global readership.

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