Blockchain technology is continually advancing in a way that other industries are able to gain benefits from it as well. As this nascent technology gains more traction, the Digital Currency Group decided to evaluate it, learning about the funding rounds from 2016 to 2018. According to a report from The Block, it should come as no surprise that the particular interest in young companies led them to find that 72 out of 127 investments were seed investments. The others were divided amongst Series A (36), Series B (15), and Series C+ (4) rounds.
The information gathered by DCG is based on the company’s own investments, as they believe it offers “a good proxy” for the whole of the blockchain industry. Seed rounds appear to have seen the majority of the funding for blockchain companies in the US, going from $1.94mm to $3.24mm between 2016 and 2018. DCG sees this change as a positive one, indicating that former skeptics of Bitcoin are starting to be more involved. Comparatively, the international seed rounds have been much “smaller and cheaper,” leading them to invest in 11 international seed deals, instead of the 8 seed deals in the US.
Around the world, the company is essentially seeing seed rounds growing in costs, rising by about 75%. However, the valuations only rose by 31%, which is not good for entrepreneurs. The investors are putting forth more money into these endeavors, but they also are having greater ownership stakes, which means that entrepreneurs do not own as much as they think in their company.
The transition from a seed to Series A round is big for the crypto industry, seeing an average of 5.6x more in value from 2016 to 2018. The adjustment from Series A to Series B was much less significant at only 2x larger.
To explain the way that these investments work, the DCG stated that the investments that they make in seed deals are normally with companies that are at least a year old, typically. Though the platform is often involved with the first “institutional” round, most of these companies have already raised pre-seed funding from family and friends in their efforts.