Bitcoin Startups See 52.9% Increase in Venture Capital Deals, Despite Crypto Market Drawdown

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• 🟡 Bitcoin startups see a 52.9% increase in venture capital deals, despite the broad crypto market drawdown in 2022, according to Trammell Venture Partners research.

• 🌍 Africa's blockchain ecosystem is facing challenges as trust in cryptocurrencies fades and many crypto-related startups struggle to survive.

• 🍟 Extra Fries: NFT marketplaces experience lowest daily users and sales since July 2021, while Plug and Play expands its crypto program into France and Twitter partners with eToro to allow users to access stocks, cryptocurrencies, and financial assets through the Twitter app.

Bitcoin Startups See 52.9% Increase in Venture Capital Deals

• Trammell Venture Partners (TVP) has published the first-ever Bitcoin-native startup ecosystem research intending to support the institutionalization of venture investment for this emerging category.

• Despite the broad crypto market drawdown in 2022, the Bitcoin sector has emerged as a growth category in venture capital, seeing a 52.9% increase in deal activity YoY.

• TVP has found a significant gap in institutional venture capital for founders focused on the Bitcoin technology stack and ecosystem.

• So why bet on Bitcoin-native companies? Well, the growth of the Bitcoin startup category has begun to accelerate as technology enablements such as SegWit (2017) and Taproot (2021) activations gave rise to the Lightning Network and other areas for entrepreneurial exploration and development.

• With this in mind, TVP’s intention is to change the misallocation of capital for Bitcoin startups. They launched the venture industry's first dedicated Bitcoin-native ecosystem-focused fund series in 2022.

• Some of their investments include: Unchained, Wavlake, Synota, and Fedi.

Crypto in Africa: From Frenzy to Fallout

• Many Africans embraced cryptocurrencies over the last few years, but trust is now fading and many crypto-related startups are struggling to survive.

• FTX's collapse has reduced the trust level of users in the sector, causing more regulatory pushback globally.

• Several crypto-related startups across the African continent have been struggling to survive; some have shut down or laid off employees.

Some examples include:

• Nestcoin, a Nigerian crypto venture studio that laid off around 30 employees.

• Lazerpay, a crypto payment company that shut down.

• Luno, a South African-founded crypto exchange that cut 35% of its global workforce.

• Paxful, and a US-registered crypto exchange with over 1.5 million Nigerian users that suspended its marketplace.

In 2022, Africa's blockchain ecosystem shattered expectations with an incredible year of VC funding. Despite facing significant challenges, the question lingers: will the region maintain this impressive momentum and see another year of success?

• The number of daily users and sales across top NFT marketplaces has reached new lows not seen since July 2021, according to Dune data. OpenSea and Blur have seen notable losses in both daily users and sales. While the reason behind the dip is not clear, it is suggested that high gas prices and tax season liquidity issues may have impacted trading patterns. (Read More)

• Plug and Play is expanding its crypto and digital assets program into France, aiming to help consumer businesses transition from Web2 to Web3. The program educates businesses on blockchain tech capabilities and introduces predestined partnerships, with L'Oreal and PVH among the major players. (Read More)

• Google Cloud offers a new program for Web3 startups, providing technology, community, and resources to help them build decentralized apps and services. The program offers benefits such as Google Cloud and Firebase usage, as well as up to $3 million in funding from Polygon Ventures for seeded firms. (Read More)

• Tiger Global Management's $12.7 billion venture fund recorded a 20% loss as of December 2022, largely due to losses from its bets on major crypto startups. More than 170 of the 250 startups backed by the fund were worth less in December 2022 than when the firm first invested. Despite its recent losses, Tiger has been one of the tech sector's biggest investors, and its investments have had a significant impact on the growth of various startups. (Read More)

• Twitter has partnered with eToro to allow users to access stocks, cryptocurrencies, and other financial assets through the Twitter app. The partnership will expand Twitter's "cashtags" feature to cover more instruments and asset classes. This marks a rare business deal for Twitter since Elon Musk took over as CEO and expressed his desire for Twitter to become "the biggest financial institution in the world." (Read More)

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