Blockchain startups, like others, share several common characteristics. These companies, usually related to cryptocurrencies, break into conventional business models and introduce innovative solutions, seeking rapid expansion and a significant position in the market. However, whether in blockchain or any other domain, Startups struggle with uncertainty and risks within a limited resource environment.
Here, venture capital emerges as a crucial lifeline, capable of driving growth. Getting it requires showing the project’s merits, its relevance, a solid development roadmap, and skillful project presentation and networking skills.. Consequently, the composition of the team and the personality of the founder are among the key factors that attract investor interest and bring a startup to life.
In 2022, total venture capital investment reached its second highest figure, with startups raising $400 billion. In the United States, 20.3% of this sum was obtained by companies with one or more female founders. Notably, one-fifth of funds acquired showed a decline in investment levels for female-led startups compared to 2021, indicating substantial progress in the continuing trend over the last decade. Specifically, companies led exclusively by women represented just 2.1% of all venture capital investments. The information comes from a report executed by Bitget and which highlights that Blockchain market funding shows limited gender diversity and consequently, women-led startups raise only 6% of total funds.
Blockchain: future perspectives
The 8.2% funding for female-led blockchain startups through Q3 2023 is 2.5 times lower than the overall figure for startups in various fields (20.3%). This indicates the need for comprehensive measures to increase the inclusivity and accessibility of the blockchain space for women, Bitget maintains.
The number of blockchain startup deals gradually decreased until the third quarter of 2023 and showed a slight recovery at the end of the study period. The situation on the fundraising market significantly correlates con crypto market prices and trendswhich may explain some decline in investments in late 2022 and early 2023.
Likewise, the financing of blockchain projects led by women is more sensitive to negative changes in the market. The creation of specialized incubator programs and venture capital funds can lead to the flourishing of this category of startups in terms of numbers and stabilize their behavior in the market to approach the smooth dynamics demonstrated by startups led by men.
Raising investments in blockchain startups shows a downward trend without significant prerequisites for an upward movement by the end of 2023. The interest of initial investors can demonstrate their belief in the transformative potential of the selected startups and their willingness to support the development of these projects in the long term.. Expectations of quick super profits are less likely to be a motivator for this investment model.
The points with minimum financing for startups led by women have already been exceeded in the period studied. Unlike startups with male founders, they were able to recover much faster, as demonstrated by their Q3 202 results, the Bitget study maintains. Initial investments are inherently risky, since many startups fail to survive.
However, the potential rewards for successful blockchain startups can be significant, which may encourage investors to take the risk. The increase in the proportion of early investments indicates an appetite among investors for innovation in women-led projects. With more projects receiving investment in early stages, Competition among female-led startups likely to increase. This could lead to faster innovation and the development of new more sophisticated blockchain startups.
The decrease in the average amount of investment, amid rise in number of funded women-led startups, may indicate that investors are interested in smaller projects that require fewer resources for development. Projects that meet these requirements are more likely to receive early-stage funding.
Several factors influence the number of women-led blockchain startups and their funding, including:
General trends in startup investment
- Crypto market situation.
- Investor sentiment.
- Investor bias
With an increase in the number of startups with female founders, Investors will be able to see that their prejudices are unfounded. This could lead to a transition from linear to hyperbolic growth in the proportion of female-led blockchain startups in the overall structure.
In this case, the dominant position of male-led blockchain startups (91.39% of male-led startup deals in Q3 2023) could be replaced by a proportion close to gender equality.
Source: Ambito
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