A recent report by venture capital firm Lattice Fund reveals that over 80% of early-stage crypto startups that secured funding in 2022 are still operational despite the major market downturns.
The report highlighted that out of more than 1,200 crypto startups that collectively raised $5 billion, 76% successfully launched a product on the mainnet. However, 18.5% of these companies have either ceased operations or are no longer active.
According to Lattice Fund’s report, Ethereum re-staking protocol Eigenlayer stood out as the most successful among 2022 startups, delivering a multibillion-dollar product by 2023. However, such success stories were rare, with only 1.5% of startups achieving “Product Market Fit” (PMF) and just 12% securing additional funding rounds.
The report highlighted that centralised finance (CeFi) and infrastructure projects had the highest success rates, with 80% of CeFi and 78% of infrastructure ventures launching products on the mainnet.
On the other hand, the gaming and metaverse sectors struggled. According to the report, both sectors recorded the highest failure rates among all sectors.
Notably, Lattice co-founder Regan Bozman commented on this trend a recent X post, stating, “Chasing narratives can get you rekt.” He highlighted that while $700 million was invested in gaming seed rounds, many projects in these sectors remained active without delivering any tangible products.
In comparing how the blockchain networks fared, the report revealed that $1.4 billion was invested in 314 Ethereum-based projects, with 18% failing in the long run. In contrast, all 18 Bitcoin-based startups that raised funds remain active and in development. Solana-based startups faced more challenges, with 26% of the 87 projects that received $350 million failing to make it to 2024. This was attributed to be largely due to external factors like FTX’s collapse and SOL token price drops.
Despite these setbacks, teams on both Solana and Ethereum had equal success securing follow-on funding. However, no projects on platforms like Near, StarkNet, or Flow raised follow-up rounds.
Lattice analysts noted that the 2022 startups face tougher conditions compared to 2021, with flat markets, limited retail interest, and a tighter token launch environment. The report also emphasised that investors have shifted their focus to sectors like DePIN, AI, and ecosystems such as Base and Monad, suggesting that success comes from anticipating future trends rather than chasing what’s currently popular.
Crypto startups have been getting good support in 2024. Binance Labs recently announced its investment in the first batch of projects from its latest incubation program. The three funded projects—Ethena Labs, NFPromt, and Shogun—did not disclose the investment amounts. With Binance’s backing, Ethena Labs aims to develop infrastructure and create a platform to transform Ethereum’s Ether into a revenue-generating stablecoin independent of banking systems.
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