How has exit activity for blockchain technology developed in the first half of 2019? This blog post explores blockchain technology exit metrics through Q2 2019 and compares them to previous years. The graph below shows the number of blockchain technology exits by year, stacked by quarters.
As the graphic demonstrates, blockchain technology has seen a total of 5 exit events through Q2 of this year. This represents 45% of the total exits in 2018, and 71% of the exits through Q2 in 2018. Some of the exit events in 2019 include Slock.it’s acquisition by Blockchains, Coins.ph’s acquisition by Go-Jek, and Neutrino’s acquisition by Coinbase.
A straight-line projection of the completed exit activity this year would come out to 10 exit events, which comprises 91% of the total exits in 2018. By the same token, a weighted quarterly average projection of 2019 exit activity would come out to 8 exit events, which falls short of the total exits in 2018 by 29%. Therefore, based on the mid-year data, blockchain technology exit activity in 2019 is projected to diminish from the exit activity in 2018.
How has investor appetite in blockchain technology evolved throughout the years? In this blog post we examine the total investments by year into this sector to help answer that question. The graph below shows the total number of investors in all deals stacked by quarters.
As the graphic demonstrates, investor activity in blockchain technology has shown strong growth in recent years. The 5-Year CAGR of blockchain technology investor activity from 2013 to 2018 is 41%. In addition, the sector has seen a total of 186 investors in all deals through Q2 of this year. This represents 28% of the total investor activity in 2018, and 50% of the investor activity through Q2 in 2018. Taking all these data points together, we can see that investor appetite for blockchain technology deals continues its upward momentum in recent years.
How is the funding environment shaping up for blockchain technology in 2019? As we pass the mid-year mark, let’s see how the year-to-date metrics compare to the historical trends. The graph below shows blockchain technology total funding by year, stacked by quarters.
As the graphic demonstrates, blockchain technology has amassed $3.7B through Q1 and Q2 of this year. This amount represents 44% of the total funding in 2018, and 62% of the funding through Q2 in 2018. The top three funding events in Q2 2019 include a $1B round into Bitfinex, a $1B round into Figure, and a $700M round into Voatz.
A straight-line projection of the completed funding this year would result in $7.4B, which is 88% of the total 2018 funding. By the same token, a weighted quarterly average projection of 2019 funding would result in $5.2B, which falls short of the total 2018 funding by 38%. Therefore, based on the mid-year data, blockchain technology funding in 2019 is projected to dwindle from the funding in 2018. However, it should be noted that 2018 was a breakout year for blockchain funding. 2019 has already exceeded the funding total for 2017, so the overall funding environment for blockchain technology is still healthy by historical standards.
For this quarter’s funding analysis, let’s examine how average funding in the blockchain technology sector is evolving. The graphic below shows the blockchain technology average funding across all deals over time by quarter.
As the graphic demonstrates, blockchain technology average funding deal size in Q1 2019 was at $19M, which increased by 8% from the $17M in the same quarter last year. The average funding deal size has experienced robust growth, with the average funding last quarter around 7 times larger than it was 5 years ago. The top three funding events in Q1 2019 include a $90M round into Ground X, a $65M round into Figure, and a $50M round into Dorae.
The blockchain technology industry has seen 1,130 investors and $11B total all time funding. Let’s analyze which blockchain technology categories have the most number of investors actively financing the startups. The graphic below highlights blockchain technology categories based on the number of investors in each category.
As the graphic demonstrates, Blockchain Innovations has the highest number of investors at 692, with Digital Asset Exchanges following behind at 237. Blockchain Innovation companies produce blockchain distributed ledger technologies. Digital Asset Exchange companies allow users to buy and sell digital assets, provide market analytics, and allow for the implementation of sophisticated trading strategies. In addition, the average number of investors across all blockchain technology categories is 147.
This blog post examines the different components of the blockchain technology ecosystem. We will illustrate what the categories of innovation are and which categories have the most companies. We will also compare the categories in terms of their funding and maturity.
Blockchain Innovations Is The Largest Blockchain Technology Category
Let’s start off by looking at the Sector Map. We have classified 1,127 blockchain technology startups into 12 categories. They have raised $11B from 1,130 investors. The Sector Map highlights the number of companies in each category. It also shows a random sampling of companies in each category.
We see that Blockchain Innovations is the largest category with 327 companies. These companies are working on distributed ledger technologies, such as smart self-enforcing contracts, cross-blockchain interoperability, and increased transaction speeds. Some example companies in this category include Blockstream, Filecoin, Blockstack, and Ripple.
Let’s now look at our Innovation Quadrant to find out the funding and maturity of these categories in relation to one another.
The Established Quadrant Has the Most Blockchain Technology Categories
Our Innovation Quadrant divides the blockchain technology categories into four different quadrants.
We see that the Established quadrant has the most number of blockchain technology categories at 6, accounting for 50% of all blockchain technology categories. The Trust and Verification category has the highest average age, and the Mining category has the highest average funding. On the other hand, the Business Service category is low on both average funding and age.
As we make our way through Q1 of 2019, let’s look back on 2018 and analyze how exit activity for blockchain technology compares to previous years. The graphic below shows total annual blockchain technology exit events over time.
As the graphic demonstrates, 2018 saw a drop in blockchain technology exit activity compared to the previous year. The 9 exit events in 2018 represent a 25% decrease from the 12 exit events in 2017 and a 47% decrease from the 17 exit events in 2016, which was the highest year on record for exit activity. Some of the exit events in 2018 include Poloniex’s acquisition by Circle for $400M, Earn.com’s acquisition by Coinbase for $120M, and Coincheck’s acquisition by Monex Group for $33.6M.
Let’s look back on 2018 and examine how funding in the blockchain technology sector compares to previous years. The graphic below shows the total annual blockchain technology funding amounts over time.
As the graphic demonstrates, 2018 experienced the highest blockchain technology funding on record at $4.1B. It represents a 28% increase from the previous year’s funding. Over the past 5 years, blockchain technology funding showed staggering growth with a CAGR of 87%.