These days, when Randy Saaf goes into meetings with potential investors and customers to talk about his blockchain-based games startup, he plays down the cryptocurrency aspect of his company. What just 12 months ago would have been a major selling point has become more of a liability.
After a surge of investor interest in cryptocurrencies in 2017 led to a big crop of startups at robust valuations, the sector cooled dramatically last year. Funding for crypto startups fell 75%—from $3.2 billion in January to $800 million in December, according to Autonomous NEXT—as cryptocurrency prices plunged more than 80% from record highs. Stumbles by high-profile startups including Bitmain and ConsenSys, which laid off hundreds late last year, as well as high-profile cryptocurrency hacks, further undermined investor confidence.