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As cryptocurrency values surged to new heights last year, venture capitalists flocked to invest in emerging bitcoin startups.
A report released on Thursday from Trammell Venture Partners noted that the number of pre-seed transactions in 2024 increased by 50%. This data suggests that more entrepreneurs are venturing into the bitcoin space, even amid a cautious investment climate for the tech startup sector as a whole.
Bitcoin saw its value more than double last year, while ethereum gained over 40%. Earlier in the year, the SEC approved ETFs that directly invest in bitcoin and later extended this rule to ethereum, drawing in a broader range of investors. The rally intensified in late 2024 following Donald Trump’s election victory, which was significantly backed by the crypto sector.
The emergence of early-stage startups can be traced back several years. The Trammell report indicates that pre-seed investments in the bitcoin-native category skyrocketed by 767% from 2021 to 2024. In total, nearly $1.2 billion was invested in various early-stage funding rounds over this four-year span.
“With four years of consecutive growth at the nascent stage of bitcoin startup development, this data confirms a lasting trend in venture capital,” Christopher Calicott, managing director at Trammell, stated in an interview.
Overall, venture capital has been slow to recover from a sharp decline after a record-setting 2021. Towards the end of that year, rising inflation led to increased interest rates, pushing investors away from high-risk assets. Nonetheless, a partial recovery was seen in 2024, with U.S. venture capital investments climbing by 30% to over $215 billion, up from $165 billion in 2023, according to the National Venture Capital Association. The market peaked at $356 billion in 2021.
Trammell’s research examines companies that operate on the premise that bitcoin will be the monetary asset of the future, utilizing the bitcoin protocol stack for their products.
However, the news was not entirely positive for the industry. Total capital raised across all rounds, including as high as Series B, experienced a 22% decline in 2024.
Yet, Calicott emphasizes the long-term trends and the rise in pre-seed deals. He attributes the renewed interest in blockchain development to technical advancements and increasing confidence in bitcoin’s durability over time.
“Serious investors no longer question whether bitcoin will survive 15 or 20 years into the future,” he remarked. “The next question is: Can the founder’s vision be realized on the bitcoin platform? More often than not, the answer is yes.”
Having invested in bitcoin startups since 2014, Trammell launched a specialized bitcoin-focused VC fund series in 2020, which includes companies such as Kraken, Unchained, Voltage, and Vida Global.
Recent analyses indicate an uptick in crypto startup fundraising. In February, crypto VC agreements exceeded $1.1 billion, based on data from the analytics firm The Tie.
PitchBook predicts that crypto VC funding may surpass $18 billion in 2025—nearly double the average annual amount of $9.9 billion from the 2023-2024 cycle. The firm anticipates increased institutional participation from companies like BlackRock and Goldman Sachs that could enhance investor confidence and stimulate further capital inflows.
Joe McCann, a former software developer, is launching his third venture fund, which will focus “exclusively on consumer applications in crypto.”
He draws a direct comparison to the early internet era.
“In the 1990s, venture capitalists were investing in physical infrastructure,” stated McCann, who heads Asymmetric, a digital asset investment firm managing two hedge funds and two early-stage venture capital funds totaling $250 million. “Ten years later, we saw companies like Groupon, Instagram, and Facebook—apps developed on top. We find ourselves in a similar position with Web3 today.”
