BitKraft Venture is optimistic about recovery in crypto venture funds as investors pursue liquid yet growth-ready startup projects. BitKraft Ventures’ partner Carlos Pereira acknowledged that investors are prioritizing startup opportunities and seeking additional liquidity in the race to recovery.
Pereira observed that markets are portraying signs favoring venture funds input as the number of startups seeking capital increases. Industry insiders indicate that capital flow is still tighter, unlike in the previous bull cycle.
BitKraft Ventures’ Pereira illustrated that investors seek compelling accounts and the presence of strong metrics before committing investment in 2024. In particular, investors pay more attention to the pre-launch and liquid opportunities within startups.
Investors Selective Conduct Owing to Scarce Venture Capital Deals
The selective conduct by investors illustrates that capital is scarce to enter venture capital deals. Such a situation will likely lead to divergence in public and private markets.
The occurrence of divergence in the markets implies that investor interest could shift in varying directions. Although public markets comprising stocks, securities and bonds could attract investment, the private markets dominated by venture capital funds could suffer reduced funding.
BitKraft illustrated that it realized $220.6 million for the second token fund last year against the $240 million target. A snippet of the US Securities and Exchange Commission (SEC) records illustrates that the capital is projected for deployment towards gaming and information technology segments.
Pereira commented that the Web3 gaming portrayed strong performance in the 2023’s final quarter. The recovery featured positive launch activity set to replicate in 2024, particularly with the gaming industry representing a $330 billion market.
Struck Capital founder Adam Struct warns that several additional challenges may thwart the projected recovery. The VC firm founder warns that early-stage ventures may face declined interest from investors.
Struck indicates that funds are prioritizing investment in businesses with proven and tested models ready to realize growth in the coming months. The executive added that Series A ground and growth phase fundraising rounds will witness continued thaw. The move arises from startup leaders becoming more rational with their firm’s building following the 2021 frenzy.
Struck projects that 2024 would present a positive season for the gaming sector to match the decentralized finance (DeFi) space. The two sectors will witness increased interest from institutions, resulting in more capital flow on-chain.
Struck considers that Web3 gaming is set for progressive performance, with dozens of innovative games announcing seamless integrations to blockchains going live.
DeFi and Tokenization to Attract Institutional Capital
Struck indicates that the looming rate cuts and increased onboarding of real-world assets on-chain. As such, he projects the total value locked within the DeFi to expand exponentially.
Data provided by DefiLlama indicates that at least $5.7 billion in capital was allocated towards crypto-related businesses last year. Lolli is one of the many crypto startups that benefited from the funding. The crypto startup offers shoppers cashback and Bitcoin rewards in various retail outlets, including Booking.com, Groupon, and Ulta Beauty.
BitKraft Ventures admitted leading $8 million Series B funding in Lolli. The round saw the participation of Serena Ventures associated with the tennis Legend Serena Williams. Lolli chief executive Alex Adelman considers that startups have the opportunity to thrive even in the present environment. The crypto market downturn witnessed in the past year has facilitated various companies to distinguish sustainable business models over the last year from those deploying frail approaches.
Avoid Excessive Fundraising
Adelman advises startups seeking funds to avoid excessive and costly funding. He warned startups against raising excessive capital amounts during strong markets in a trap owing to the availability of money.
Adelman indicates that while capital inflow is desired, raising excessive amounts could lead to unsustainable spending habits. He added that excessive fundraising could lead to future down rounds.
Adelman indicates that excessive capital risks subject the startups to investors with misaligned visions besides the risk of diluting equity shares for the critical stakeholders.
Adelman suggests that startups seeking to fundraise in 2024 remain strategic by fundraising relative to the need to realize the next growth phase.
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