I just came across this report from Lattice Fund that’s pretty eye-opening. It says that over 80% of crypto startups from 2022 are still operational! And we all know how chaotic that year was. The report breaks down some interesting points about success stories, challenges, and even trends that might be useful for fintech startups and SMEs out there.
The Good and the Bad
First off, let’s talk about some of the success stories. Eigenlayer is one that really stands out. It’s basically an Ethereum re-staking protocol, and it’s done so well that it’s a multibillion-dollar operation now. But here’s the kicker: Eigenlayer is kind of an exception. According to the report, only 1.5% of those startups found what they call “Product Market Fit” (PMF). Ouch.
And then there's the sector breakdown. Turns out infrastructure and centralized finance (CeFi) sectors did pretty well—like 80% of them launched successfully on mainnet. But gaming? Yeah, not so much. And as for ecosystems, Ethereum was the big winner with $1.4 billion invested in 314 projects—though 18% of those failed. On the flip side, Solana-based startups had a rougher time; nearly a quarter of them are already defunct.
Trends That Might Affect Your Startup
Now here’s where it gets interesting for us non-crypto folks: Lattice analysts pointed out some market trends that could be useful for fintechs and SMEs to note. First off, they mentioned how “2022 vintage” crypto startups face a flat market now with no retail participation in sight. Basically, if you’re not getting more funding or hitting PMF, you’re kinda stuck.
Also worth noting is how many investors are pivoting to newer sectors like decentralized physical infrastructure (DePIN) and even AI! So if your startup isn’t looking at those areas yet… maybe it should?
Sustainability: The Long Game
One key takeaway from the report is about sustainability—both in terms of business models and environmental impact. It suggests that integrating blockchain tech into sustainable practices could be crucial for long-term survival.
Blockchain can actually help improve environmental sustainability by facilitating decentralized renewable energy projects and aligning with the UN's Sustainable Development Goals (SDGs). Who knew?
Lessons for Fintech Startups and European SMEs
So what can we take away from all this? For one, fintech startups could benefit from diversifying their funding sources—just like those crypto startups did back in ’22 when they heavily relied on alternative forms like initial coin offerings (ICOs).
Another point is about early-stage versus later-stage funding; many European crypto startups seem to drop off as they progress through stages which suggests SMEs need to work harder at securing follow-up rounds.
Lastly, having a supportive regulatory environment seems crucial—and lucky for us there are initiatives like the European Blockchain Services Infrastructure (EBSI) aimed at strengthening our ecosystem!
In summary: while not all crypto startups made it through unscathed, there are definitely lessons to learn from their experience!
