The crypto winter may or may not thaw, but not everyone is going into the new year without hope: A majority of founders are optimistic about the opportunities for crypto startups in 2024, per a new survey shared exclusively with TechCrunch+.
The CoinFund Founder Forecast survey gathered responses from 30 of CoinFund’s web3 portfolio companies across the pre-seed, seed and Series A stages. The survey ran from November 7 to November 17, when cryptocurrencies like Bitcoin and Ethereum were starting to show signs of price recovery.
While some crypto startups may be going out of business, Alex Felix, managing partner and chief investment officer at CoinFund, said these 30 companies have sufficient runway and are thinking about the new year. “The one thing that was so different about this bear market is the resolve to keep going and not let price action or media cloud the vision,” Felix said. A lot of the issues we saw during this crypto downturn were the result of human errors or poor governance, which “reignited the spirit to build,” he added.
According to the survey, the top areas primed for growth in the coming year include AI integrated with web3, zero-knowledge technology, decentralized finance, consumer apps, gaming, layer-2 blockchains and crypto wallets.
It’s not a huge surprise to see founders excited about the potential of web3 products that include AI, but Felix feels the marriage of the two technologies will take a while to truly succeed. “The crossover might not take off in 2024, but it is a theme that we’re betting on in a big way in three to five years as AI settles down from the hype and becomes more practical and useful in business and financial contexts,” he said.
Other sectors that founders think also have potential for growth include real world assets, decentralized physical infrastructure networks (DePIN), and Web 2.0 and web3 services.
“It’s actually funny to look at the top growth areas because those are largely aligned with our areas of interest going forward,” Felix said. “The intersection of AI and web3, ZK, scalability, consumer apps and gaming . . . those are very much what we consider emerging subsectors.”
Crypto startups, like the wider tech industry, saw a number of layoffs in 2023, but 70% of the founders surveyed said they actually intend to hire next year. None plan to downsize. The top roles the founders said they’d hire for included product engineering, market strategy, public relations and content. Felix agreed with this forecast, saying these areas will be the “biggest needs” for web3 startups in 2024.
Startups usually seek out talent after they’ve raised some capital, so it makes sense that about half of the founders surveyed said they plan to raise between $5 million and $10 million next year.
“What I would really like to see is prudence in the size of capital raises people think are realistic for a $5 million to $10 million figure,” Felix said. A lot of founders have been raising at the right size, while being more capital efficient with future growth plans.
Overall, the survey showed that founders are going into the new year with a positive but prudent attitude. Operating through the relatively tougher conditions of the crypto bear market certainly seems to have resulted in some amount of confidence for those with enough runway to get through. It’s going to be interesting to see where crypto takes us in the next couple of years.