During the bull market of 2021, the crypto market attracted a lot of attention. The craze about decentralized finance (DeFi) and non fungible token (NFT) projects brought many new investors, but also large companies, such as ventry capital companies that started investing in the crypto sector.
Venture capital firms are investment funds that provide capital to startups and young companies with high growth potential. In return, the investors receive shares or equity in those companies. According to a report of crypto venture, Lattice, many of the investments turned out to be unsuccessful.
Only 5% of the companies in which ventures have invested have actually been able to develop a product that was also used by the market. The disappointing results are in stark contrast to the huge funding received by crypto and blockchain startups. Lattice’s report surveyed nearly 800 companies. In total, all crypto startups had raised $2.6 billion. 70% are still in the development phase, while 20% of the companies have stopped.
Web3 popular
Among the crypto companies, the most invested in Web3 projects. A total of $977 million in investments went to this sector. The DeFi sector saw investments total $762 million, while centralized exchanges (CeFi) received a lot less attention from capital firms with total investments of $237 million.
The most successful companies turned out to work on the Ethereum (ETH) blockchain. 4% of all successful projects turned out to settle here. In contrast, projects on the BNB blockchain are from cryptoexchange Binance the least successful, with a failure rate of no less than 30%.
Crypto market still immature
The failure of crypto startups to achieve mainstream adoption reveals that the crypto market is not yet fully integrated into the wider economy and society. While there is significant investment and interest, the general public’s lack of acceptance and understanding of cryptocurrency and blockchain technologies remains a challenge. In addition, the high volatility and regulatory uncertainties surrounding the crypto market may contribute to the image of immaturity.