After a strong start in the beginning of this year, investment in Bitcoin startup companies plunged in third quarter, as investors carefully select more conventional startup companies to invest.

Startup companies that focused in bitcoin related services such as wallet providers, bitcoin exchanges, and payment service providers has drawn venture capitals to invest in them. Invented in 2008, bitcoin opened the door of many possibilities in digital payment and digital currency. The system of peer to peer electronic cash allows online payment to be sent directly without going through financial institution. Bitcoin startup companies have arisen in many parts of the world, from U.S., England, Mexico, Chile, several countries in Europe, India, China and Philippines. Its flourishing startup companies also attracted investors to invest in bitcoin companies.

Venture Beat, who focus on technology innovation news, reported that capital investment for bitcoin startup companies have slowed down even more in the third quarter.  After a strong start with $230 million capital investment in the first quarter, bitcoin investment faced a slowdown in the second quarter and continued to a 40% drop in third quarter. 

One of the startups that suffered from slowdown is a mega project Dunvegan Space System. Bloomberg, reported that the startup is now in "deep freeze" according to its founder, Jeff Garzik. Dunvegan Space System (DSS) is a startup which specializes in space-base market, having computer servers attached to satellites to create a network of data processing satellites called Bitsats. The satellites will contain data about daily bitcoin transactions. Due to insufficient capital investment, DSS have to shutdown the project. 

Although a more cautious step is taken by investors to drive away from bizarre business prospect, bitcoin startup companies with more conventional approach are still attractive to investors. Forbes reported that Digital Currency Group has raised an undisclosed sum from a number of investors. The prominent name includes MasterCard, Bain Capital Ventures and New York Life. Digital Currency Group was founded by Barry Silbert, a digital finance prodigy, who has a good track record of successful SecondMarket startup. 

Starting this quarter, investors more carefully selected bitcoin-related startups to invest. A more realistic and down to earth business plan is the number one priority for investors. As it was shown with huge decline of investment for bitcoin startup companies in this quarter.