AI and fintech emerge as key focus areas for start-ups, with 75 per cent of all deal flow focused only on early-stage rounds.
$23.7bn has been raised by 3,738 blockchain companies since 2013, according to a new study by Outlier Ventures, in mainly early-stage rounds of funnding.
The number includes $1bn that has been raised by blockchain companies in London since 2013, which has evolved to be a hub for early-stage companies looking to raise seed stage rounds. Pre-seed, Seed and Angel rounds account for 75 per cent of all the deals in the ecosystem.
Blockchain’s big year appeared to come in 2017 when a flood of money entered the sector, in part owing to the stellar rise in the price of cryptocurrencies.
Blockchain startups have raised finance in multiple forms including ICOs, debt, direct investments and crowd-funding. However, apart from a handful of exchanges and wallets, there hasn’t been an application that has broken through to mainstream adoption, yet.
Joel John, research analyst at Outlier Ventures says that despite plenty of capital.
“There is often an expertise gap with capital investments. The heavy competition in early-stage financing for blockchain-based startups means a large number of investors provide nothing more than capital. Investments in equity are considered a hedge against liquid tokens,” he said.
The huge wall of cash has not converted to follow on-rounds, and Outlier’s report says this indicates that while early-stage funding is relatively easy, many traditional VCs are waiting for evidence of product-market fit and clearer signs of revenue before making further investments.
“Average seed amounts are healthy, but evolving to reach a Series B raise is a hard business. Challenges with learning curves in user-experience and designing profitable business models make it difficult for startups in the ecosystem to evolve past a point,” John said.
For those interested in the space from an entrepreneurial perspective, Outlier Ventures has also just launched its ‘Base Camp’ program to support the development and growth of new technologies in the open data economy.
Details on how to be part of the program here.