Shift in Investment Focus
In 2019, we witnessed a seismic shift in the investment landscape, moving away from the singular allure of digital currencies to a broader horizon of convergence applications. According to the “Investment in Blockchains 2019” report released by Outlier Ventures, the landscape has transformed significantly, with blockchain-focused firms amassing an impressive $23.7 billion since 2013. It seems the investors caught the Bitcoin and Ether fever and have now decided to diversify their portfolios in pursuit of even grander returns.
The Role of Early Stage Investors
Early stage investors are strutting their stuff! They’re not just focusing on crypto anymore; they’re diving into applications that merge blockchain with other hot technologies. The proof is in the pudding—or rather, the report—which states that artificial intelligence is top dog in this new world order, holding a solid 33.8% stake, followed closely by ventures involving data and ownership.
Funding Trends from Seed to Series
When it comes to the nitty-gritty of financing, the report illustrates an intriguing trend: the seed stage financing is raking in approximately 30 times the cash of pre-seed raises, while Series A rounds are delivering a whopping 10 times what seed rounds do. This remarkable interest is exemplified by the fact that Series A funding rounds, despite only accounting for 12.8% of all funding rounds, command over 33% of total capital financing. Talk about being a popular kid in school!
Challenges Facing Blockchain Enterprises
However, not all is rosy in the blockchain garden. Many companies find themselves ill-prepared for the challenges that come with Series B funding rounds. The report ominously notes,
“the mortality rate of blockchain companies is high due to challenges stemming from regulations, a lack of traction, and access to investors that fund firms post Series B.”
Geographic Distribution of Investment
Geographically speaking, the United States is flexing its muscles as the heavyweight champion of blockchain investment. It surpasses the United Kingdom, China, and Singapore combined. San Francisco is truly the ‘Silicon Valley of blockchain,’ leading the charge in startup financing, while London has cozy-ed up as a haven for early stage firms seeking seed capital, having managed to pull in around $1 billion since 2013.
Global Blockchain Spending Outlook
Finally, let’s not forget about the wallets worldwide. A different yet insightful report from the International Data Corporation predicts that global spending on blockchain will balloon to almost $2.9 billion in 2019, marking an astounding 88.7% increase from 2018. The U.S. is projected to top the list with $1.1 billion spending, followed closely by Western Europe and China, forecasting investments of $674 million and $319 million respectively.
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