According to a report from venture capital firm Lattice Fund, more than 80% of startups that raised funding in 2022 are still active despite the high-profile bankruptcies of several crypto lenders.
Analysts found that of the 1,200 crypto startups that raised $5 billion in funding in 2022, 76% managed to launch a product on the main network, while 18.5% suspended operations or announced their closure. At the same time, only 1.5% of startups managed to create a product that meets the market, and only 12% of projects were able to conduct additional rounds of funding.
The most successful sectors for crypto investments were infrastructure and centralized finance (CeFi). About 80% of crypto startups working in the CeFi space and 78% of infrastructure projects launched products on the mainnet. The researchers noted that gaming and metaverses were little more than hype — these were the worst performing sectors in the crypto space.
“Chasing big stories can be frustrating. Blockchain gaming has seen $700 million in seed funding, but games and metaverses have largely failed to deliver on the promise of products,” said Regan Bozman, co-founder of Lattice Fund.
Ethereum remains the most preferred layer-1 blockchain for launching new projects, while Bitcoin-based startups have proven to be the most resilient. $1.4 billion has been invested in 314 Ethereum-based projects, and 18% of these crypto platforms have failed. Meanwhile, all 18 Bitcoin-based startups that raised funds in 2022 are still active and growing.
The researchers noted that $350 million was invested in 87 Solana-based startups. However, due to the collapse of the FTX crypto exchange and the sharp fall of the SOL coin, 26% of the projects could not “survive” until 2024. As for the services created on the basis of the Near, StarkNet and Flow networks, it never came to subsequent rounds of funding.
Lattice Fund suggested that “vintage crypto projects of 2022” are technically in a difficult position. Investors have switched their attention to “hot sectors”: DePIN (decentralized networks of physical infrastructure) and artificial intelligence (AI), as well as the Base and Monad ecosystems. Analysts concluded that the profitability of crypto projects depends not on chasing what is popular now, but on what will be popular in 1-2 years.
According to a February study by AlphaQuest and Storible, of the 12,343 crypto assets that have ever made it onto CoinMarketCap, more than 8,850 have failed and will cease to exist in 2023.
