Blockchain and Web 3.0 venture capital firm Outlier Ventures has just published an interesting overview into global Blockchain investment and market trends worldwide over the past six years.
What its data seems to suggest: that as much as $23.7 billion has been raised since 2013 by 3738 Blockchain companies – and that while early-stage fundraising happens a lot, says Investments in Blockchain, follow on rounds are, in its words, “few and scarce”.
That’s to say, Blockchain start-ups have raised finance in multiple forms including ICOs, debt, direct investments and crowd-funding – but, discounting a handful of exchanges and wallets, there hasn’t been an application that has broken through to mainstream adoption yet.
This definitely isn’t for lack of access to capital, says the study. Rather, the researchers claims, the challenge is more about expertise and guidance at early stages, quoting its Research Analyst, Joel John, that, “There is often an expertise gap with capital investments.
“The heavy competition in early-stage financing for blockchain-based startups means a large number of investors provide nothing more than capital. Investments in equity are considered a hedge against liquid tokens [and] in addition to a lack of much-needed guidance during the early stages, this also brings along expectations of quick exits from investors that are used to typically being in liquid assets like ICO tokens.”
Still, the money is still flowing in, says the study: in 2019, the frequency of Blockchain investments will be up nine times in comparison to 2013, with Pre-seed, Seed and Angel rounds accounting for more than 75% of all the deals, with the number of early-stage backers allegedly increasing “substantially” due to the massive returns from early investments in Bitcoin and Ethereum.
However, says Outlier, this financing has not converted to follow on-rounds, and indicates that while early-stage funding is relatively easy, many traditional VCs are waiting for evidence of product-market fit and clearer signs of revenue before making further investments.
“Blockchain startups have the two-fold challenge of establishing a new paradigm and warding off existing competition – a hard task to do without the necessary guidance in place,” warns Joel.
However, change may be in the air, as Outlier sees a shift from focusing purely on cryptocurrency to convergence applications. AI leads the pack here, it claims, with Fintech and data analytics fast on their heels.
Finally, the United States leads globally when considered at a national level, but regional Fintech hubs such as London catching up – and London has evolved to be a hub for early-stage companies looking to raise seed stage rounds, with roughly $1 billion being raised by Blockchain companies in The Smoke since 2013.
