Trammell Venture Partners (TVP), based in Austin, Texas, has unveiled its second annual findings from its extensive research into the burgeoning Bitcoin-native startup and venture ecosystem.
Despite a notable slowdown in investment in the crypto venture capital market throughout 2023, TVP's research highlights a remarkable increase in the Bitcoin startup sector, particularly at the pre-seed stage, with a striking increase in 360% year-over-year in number of transactions.
Unlike the broader startup landscape which saw a decline in exit activity to a 10-year low in 2023, Bitcoin-native startups showed resilience and growth, marking an increase of 69.2 % from one year to the next. Data from TVP revealed that these early-stage Bitcoin startups have collectively raised nearly $1 billion between 2021 and 2023, signifying substantial interest and investment in this sector.
Christopher Calicott, managing director and founding partner of TVP, commented on the results, noting a strong desire among founders to build on Bitcoin. He highlighted the growing supporting infrastructure and technical advancements that are fueling innovation within the Bitcoin ecosystem.
“Early indicators from the TVP study are consistent with the expectations we had for the end state of the 'crypto' business: founders really want to lean specifically on Bitcoin,” Calicott said. “With a growing range of technology tools fueling improved scalability and buildability on Bitcoin, this long-held TVP hypothesis is becoming a reality supported by evidence and data.”
In 2023, the number of Bitcoin-native venture deals increased significantly, increasing by 69.2%, while the number of broader venture deals decreased by 35.3%. Although with the increase in Bitcoin-native VC deals, crypto VC deals still represent the overwhelming majority of deal counts and invested VC dollars.
“Due to bitcoin’s cyclicality and institutional traction, its dominance in terms of market capitalization is even greater than at the time of our 2023 report,” Calicott continued. “Despite this, the allocation to Bitcoin's native venture capital remains relatively small, relatively speaking. We believe the delta will begin to close as more allocators begin to see the cumulative benefits of a rapidly expanding design space on Bitcoin from these early-stage Bitcoin startups.
TVP's commitment to generating knowledge and research on the venture capital landscape led to the launch of the first round of funds dedicated to the industry's native Bitcoin ecosystem in 2021. This annual publication of the research note on TVP's emerging Bitcoin-Native venture landscape aims to provide valuable data and support for institutional investors looking to explore opportunities in the growing Bitcoin startup sector.
The full research brief on the TVP Bitcoin startup ecosystem is available for downloadproviding a comprehensive overview of the evolving landscape and investment opportunities in Bitcoin native technologies.