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Impressum:  Deutsche Ventures GC GmbH, Charlottenstrasse 2, 10969 Berlin,
contact@deutsche-ventures.com, Registered office: Berlin-Charlottenburg, HRB 144903 B

100 blockchain STARTUPS IN EUROPE 2018

FOREWORDS

In 2018, the crypto-market is cooling down, but technology is heating up

10 years ago, the genesis block of the cryptocurrency Bitcoin was mined. Back in 2008, while the financial world was sinking, Bitcoin transactions were growing up steadily. Few years after, in 2012, the cryptocurrency brokerage platform Coinbase received a  600k€ seed funding round. Since then, blockchain has been progressively highlighted as a potential disruptor for pretty much every industry, existing business model and organizational structure… obviously blockchain became the new black.

Meantime, a new way of funding, by issuing crypto assets, appeared under the name of “Initial Coin Offering” or ICO. The amounts raised (*1) via ICO went rapidly out of control, raising huge amounts (6 over 100 millions$) directly from crypto enthusiasts. This phenomenon pushed cryptocurrencies' valuation upwards. Inevitably, in early 2018, the crypto over-heating led to a cryptocurrencies-crash. In 2018, cryptocurrencies lost roughly 86% (*2) of their market capitalization. Consequently, startups within the industry holding cash reserve in cryptocurrencies faced a liquidity issue. Some notable actors of the industry processed further with layoffs (Consensys, Steem…) (*3).

Meanwhile, in October 2018 Coinbase’s valuation is around 8 billion $ (*4).  According to Crunchbase database, there are today 3959 startups with the tag “Blockchain”. Some of them raised equity funding from traditional investors. Still, according to Crunchbase, nearly 25% of them are based in Europe, so 961. In spite of the bear market, in Europe, investments made into blockchain startups by professional investors are on the rise (*5). As an example in November 2018, the London based startup Argent raised a first seed round of 4Mio$ (*6). Venture Capital money is still going towards the Blockchain sphere, funding later stages and seeding new types of projects. Also, the number of blockchain patents is increasing (*7) on a global scale.

This study is based on a self-compiled database of 100 equity-funded blockchain startups, which raised “Venture Capital money” by the end of 2018 and are located in Europe (it includes more broadly some coming from Israel). Half of them raised over 2Mio$, sometimes by using different financing funnels (Venture Capital +Initial Coin Offerings). The 100 startups were then clustered. Some of these clusters are driving more attention and money over time. If originally most of the funds used to be invested in ecosystem and currency related projects, investments are shifting towards industry-solutions and technical upgrades (privacy, scalability, interoperability). Geographically speaking, there are blockchain “hubs” in Europe, which weight more than 10% of the sample. Each of these hubs has local characteristics.

With this mind and under the name of the Deep.Circle, Deutsche Ventures and ESCP Europe carried out in December 2018 a research on European blockchain startups, their financing mode and their field of focus. Some of the highlights are displayed in this report.

1: https://www.visualcapitalist.com/video-ico-explosion-one-animated-timeline/

2: https://coinmarketcap.com/charts/

3: https://thenextweb.com/hardfork/2018/12/04/cryptocurrency-bear-market-blockchain/

4: https://www.cnbc.com/2018/10/30/cryptocurrency-start-up-coinbase-valued-at-8-billion-despite-bitcoins-plunge.html

5: https://www.coindesk.com/vc-investment-in-blockchain-startups-is-up-280-so-far-this-year

6: https://techcrunch.com/2018/11/20/argent-a-smart-crypto-wallet-app-with-a-banking-look-raises-4m-from-euro-vcs/

7: https://www.longhash.com/news/blockchain-patents-on-the-rise-despite-bear-market