Given the plethora of data we have in our bitcoin sector scan, I thought it would be interesting to see some funding metrics, like the total funding by category and percent of companies funded within a category.
A quick note before we look at the chart: some companies fit into multiple categories, which effects the data. For example, Xapo is a company that offers a bitcoin wallet and debit card, which places them into both the Bitcoin Wallets and Bitcoin Financial Services category. Their $40M total funding to date therefore appears in both categories.
Looking at the data, a few interesting points pop out:
- Focus on access to bitcoin: It probably shouldn’t come as a surprise, but a lot of the early venture money has gone into companies that allow people to interact with bitcoin in some way. Exchanges help people switch between fiat and crypto-currencies, Wallets help people securely store their digital assets, and Payments help merchants and consumers transact in the real world.
- Bootstrapping is possible: One would normally assume that hardware-centric companies, such as those who build bitcoin mining rigs, would have relatively intensive capital requirements. However, as we can see on the chart above, the tremendous amount of hash power running the bitcoin protocol hasn’t lead to a lot of financing announcements. Perhaps the organic adoption rate of bitcoin and pre-order revenue (via crowd-funding mechanisms) has allowed these Mining companies to bootstrap themselves?
- Bitcoin Big Data as an outlier: There are currently very few companies that offer solutions to easily search and analyze the blockchain in rigorous ways, but around 50% of them have received venture funding. One way to look at this is that the small number of data points has lead to an outlier result, the other is that VCs know something the public doesn’t. In my opinion, I think understanding the blockchain really well is a precursor to such things as “smart contracts”, which is where bitcoin could really shine, but I’ll let the reader draw their own conclusions.