With over 1,200 crypto startups receiving funding in 2022, an impressive 80% remain, overcoming the odds presented by a grueling bear market.
Venture Capital firm Lattice recently reported that over 80% of crypto startups that raised funds in 2022 still exist, and many have made their mainnet launches. More than 1,200 startups raised funds that year, with the majority making it through the strenuous bear market that followed, which saw numerous Web3 firms go bust.
Projects That Brought Utility Outshone Those That Stuck to Hype
Lattice mentioned that $5 billion went into funding startups in 2022, with 76% of the early-stage projects debuting their mainnet products. About 18% of projects that received funding have since shut down. While projects that operated within the hottest niches of that period, like Metaverse and NFT, have mostly shut down or continue to fail to register users if they are active, infrastructure projects have fared the best.
“For instance, the metaverse sector had 75 teams raise nearly $280M yet none have found PMF and over 21% have shut down and you’d be hard pressed to hear anyone talking about the metaverse,” Lattice’s report read.
EigenLayer, a restaking platform, made the biggest breakthrough from the class of 2022. It went on to become a multi-billion dollar project by 2023. Still, this story is an outlier as many projects have not grown to become as big as it has. Regardless, 80% of infrastructure projects remain active, followed by 78% of CeFi projects.
Those that survived and made it to the 80% cut struggled to receive additional funding. Only 12% did so as the crypto market dipped right after these projects got their hands on investor funds. Investors have “tightened their purse strings” ever since the FTX collapse and the long crypto winter that ensued.
Clearly, projects that have brought steadfast utility to the Web3 ecosystem have survived the most uncertain stage for any startup despite the turbulent bear market that encapsulated a good chunk of 2022 and the entirety of 2023. Discussing the report on X, Lattice’s co-founder Regan Bozman mentioned, “Chasing narratives can get you rekt,” adding, “$700M went into gaming seeds rounds but Gaming & Metaverse had some of the highest fail rates and likelihood to be active without anything shipped.”
Looking at how projects in various blockchain ecosystems held up, Ethereum-based ones are the clear leaders. Nearly 80% have launched their mainnet products. Solana followed at 61%, considering its close ties to FTX and the tremendous price drop its native token, SOL, endured because of the fact.
