Outlier Venture’s State of Blockchain report identifies soaring demand from VC’s but falling interest from retail investors
Leading blockchain and Web 3.0 venture capital firm Outlier Ventures today published its State of Blockchains Q2 report providing an overview into blockchain investment and market trends. According to the report, blockchain start-ups raised $1.8 Billion from 343 separate VC deals during the first half of 2018. This represents a new record for VC investment in the sector, surpassing all previous years.
2018 has seen a surge in VC ‘mega-rounds’ of over $100 million with Bitcoin mining manufacturer, Bitmain, raising $400 million in a series B round and stating its ambition to launch an IPO. However, retail investor confidence remains low due to the sustained bear market. This is resulting in a trend toward VCs and private investors stepping in to fund larger percentages of token sales.
Beyond capital raises there were notable signals of intent from major web companies and corporates to enter the blockchain space. Facebook appointed its first ‘director of engineering, blockchain’. Messaging app LINE, investment services Robinhood and Revolut all signaled their intent to make it easier for users to trade and exchange crypto-assets indicating that the ‘consumerisation of finance’ is continuing at pace.
Lawrence Lundy-Bryan, Head of Research at Outlier Ventures commented: “Record levels of capital continues to flow into blockchain startups, albeit from more traditional sources this year.” He continued: “This quarter has proven beyond doubt that interest in blockchain technology and crypto-assets goes beyond price and trading. Big consumer-facing businesses like Facebook, Baidu and LINE are entering the game and will on-board millions, if not billions of users.”
Blockchain M&A: an emerging macro-trend
Another notable trend in the industry is a growing number of M&A deals. Tron’s acquisition of BitTorrent marks the beginning of well capitalised blockchain companies acquiring more traditional Web 2.0 players to establish growth. Coinbase has acquired seven companies in the previous quarter alone.
Jamie Burke, CEO at Outlier Ventures commented: “We are seeing extremely well capitalised protocols launch venture funds and accelerators as well as acquire equity-backed companies and teams to scale development or buy network-market-fit.” He continued: “We are calling this ‘The Hungry Protocol’ and understanding what M&A looks like in a decentralised Web will be one of the most important things for investors and protocol foundations to understand and master. There are certainly some strange and varied approaches occurring already.”