Crypto investment firms hope for better times in 2024.

As the cryptocurrency investment environment is starting to recover, investors are focusing on interesting business opportunities. Industry insiders told Cointelegraph that even while the market picture is improving, financing is still more scarce than it was in earlier optimistic cycles. Before making a financial commitment in 2024, investors are searching for strong performance data and engaging stories.

Funds are becoming increasingly interested in chances for liquid or pre-launch startups. This trend suggests a lack of funding for venture capital transactions, which could cause the public and private markets to diverge. Private markets, like venture capital funds, may have limited funding sources even if public markets continue to draw investment.

 As an example, BitKraft Ventures raised $220.6 million for its second token fund in 2023, missing its $240 million fundraising goal, according to SEC filings. The funds will used for the gaming and information technology industries. Web3 gaming, for example, has shown promise in the fourth quarter of 2023, with both recent and upcoming launches expected in 2024. BitKraft Ventures partner Carlos Pereira states that the gaming market is a $330 billion industry.

Yet, startups especially those in their early stage may still face several other difficulties. According to Adam Struck, the CEO of Struck Capital, venture capital funds typically seek out companies with established business plans that have the potential to expand in the upcoming months.

“I think that after the frenzy of 2021, startup leaders have become increasingly rational in their company-building, and the Series A and growth stage fundraising markets will continue to thaw.”

Struck also projects that more institutional funding will move on-chain in 2019, which will be good news for the gaming industry and the decentralized finance (DeFi) area. “I anticipate a boom in Web3 gaming with the release of numerous cutting-edge games that seamlessly integrate with blockchains,” he said. 

 “I expect an important rise in the total value locked in DeFi this year due to impending rate cuts and an increase in real-world assets moving onto the chain.”

Insights from Lolli CEO Alex Adelman

According to DefiLlama data, at least $5.7 billion in funding was given to cryptocurrency companies in 2023.

Lolli is one of the cryptocurrency firms that got investment the startup partners with Ulta Beauty, Groupon, and Booking.com to provide customers with Bitcoin and cashback rewards. An $8 million Series B investment sponsored by Bitkraft Ventures was participated in by investors in the startup, including Serena Williams’ Serena Ventures.

According to Alex Adelman, CEO of Lolli, startups can still succeed in the current climate. “In a way, the decline in the cryptocurrency market over the past year has helped distinguish companies with sustainable business models from those without.”

Adelman suggests against giving firms looking for capital too much or too expensive funding. He said,

“While more capital may seem like a good thing at the moment, raising too much can lead to unsustainable spending habits, future down rounds, working with investors that are misaligned on the company’s vision, and diluting the equity shares of key stakeholders.”

“Many startups will raise an excessive amount of capital when the markets are strong, simply because the money is available,” he said. Adelman suggests that in 2024, entrepreneurs should strategically raise capital, “bringing in only the amount that they need to reach their next phase of growth.”