The blockchain technology has the potential to transform global banking infrastructure, speed settlements, as well as streamline stock exchanges. On the other hand Bitcoin, the most prominent cryptocurrency, can offer an electronic payment system on a global scale. As a result, both sectors are growing year-on-year within FinTech, and are gathering increased interest from investors.
Blockchain & Cryptocurrency funding sees record levels in 2016, as the total deals falls for the first time in 2012-2016
- Total funding for Cryptocurrencies & Blockchain (both financial as well as non-financial) amounted to $572.3m in 2016 – a record year for the sectors.
- Total deals for the sectors fell 14.6% in 2016, with the number of deals in 2016 a nineteen-fold increase on 2012’s total, and almost treble 2013’s total.
- Both sectors have seen a rise in funding every year since 2012.
The Blockchain & Cryptocurrency sectors see the first funding round to break $100m as the top 10 funding rounds in 2012-2016 are dominated by North America & Europe
- The top 10 deals in Blockchain & Cryptocurrency during 2012-2016 total $570m, which is over a third of the total invested in the sectors during the same period.
- Over half of the companies are North America based, with the top 2, 21 Inc and Coinbase, both San Francisco-based Bitcoin companies. The only company to feature twice in the top 10 is Boston-based P2P payments provider Circle.
- Circle’s deals rank third and seventh in terms of the largest Blockchain & Cryptocurrency deals to date.
- The largest funding round was for 21 Inc in March 2015, a Bitcoin company which allows users to replace a public email with an inbox that pays them. The round was led by investors Andreessen Horowitz and RRE Ventures
- The second largest round was in January 2015 for Bitcoin company Coinbase, in a Series C funding round led by DFJ Growth with The New York Stock Exchange, USAA, BBVA, NTT Docomo, Valor Capital Group, Vikram Pandit, Tom Glocer, Carlos Rodriguez Pastor, Andreessen Horowitz, Ribbit Capital and Union Square Ventures co-investing.
The period 2014-2016 sees investment share move from Cryptocurrencies to Blockchain, as financial Blockchain has consistent yearly growth rate
- In 2014, Cryptocurrency companies had a 63% share of the Cryptocurrency-Blockchain funding, while in 2016 this share has over halved to 31%.
- Financial-focused Blockchain companies have seen an increase in the total funding rounds each year from 2014-2016, with a 33% and 10% increases in 2015 and 2016 respectively.
- Non-Financial Blockchain saw a large rise in funding rounds in 2016 compared with 2015, rising from only 8 deals to 34 in 2016, a 325% rise as investors seek other applications of the technology.
The Blockchain and Cryptocurrency has seen a rise in funding each year from 2012-2016. This was despite the total deals in the final year, 2016, decreasing for the first time in the period, meaning deals are becoming larger on average as the sectors become more mature. Larger but less frequent investments is also suggested by the top 10 deals for the sectors over 2012-2016, with all of them coming in 2014 onwards.