With over 3,000 deals in eight years, blockchain VC still makes up only 1% of the global VC market.
Did you know that between 2012 and 2020, over 3,000 blockchain venture capital deals occurred across the world? Cointelegraph Consulting has built the most comprehensive data set of all blockchain venture capital to date. Covering over $16 billion invested by 928 different angels, VCs, incubators and corporates, the new 75-page report is the most in-depth analysis ever written on the blockchain VC industry.
“The Cointelegraph Blockchain Venture Capital Report” contains exclusive interviews with the most influential VCs including Etiënne vantKruys of TRGC, Jin Kang of #Hashed, Alon Goren from the Draper Goren Holm Fund, Stephan Wong from PNYX Ventures, Camron Miraftab of Rarestone Capital, Michael Anderson of Framework Ventures, and Ryan Taylor of the Dash Investment Foundation.
The report is divided into three major sections including information relevant for startups, venture capitalists (general partners) and investors (limited partners). The following are highlights from the report.
Projects with coins that were popular for 2020 blockchain VC deals included: Avalanche (AVAX), Curv (CRV), DerivaDEX (DDX), Nervos Network (CKB) and Zilliqa (ZIL), just to name a few.
Many blockchain VC funds have outperformed traditional VC funds. While traditional funds have had returns in the low double digits, several blockchain venture capital funds have earned 10 times that. Apart from the staggering returns, blockchain-focused VC funds have also enjoyed a low correlation with traditional asset classes.
For example, Blockchain Capital’s BCAP token’s correlation with stock indexes has been in the 0.00–0.14 range. The diversification potential for investors interested in venture capital is loud and clear.
VC investments in the blockchain industry came under serious economic pressure during COVID-19. Blockchain VC investments decreased by 13% between 2019 and 2020, while traditional VC investment increased by 18%. The global amount invested in blockchain VC dropped from $3.17 billion in 2019 to $2.77 billion in 2020.
In 2020, the hot trend for blockchain VC deals was decentralized finance. More than 200 venture and hedge funds bet on the future of 100+ DeFi projects. Currently, over $20 billion in capital is locked into DeFi protocols.
To learn more about how to get involved with DeFi, read Cointelegraph Consulting’s Definitive guide on DeFi here.
For firms that are in their Series A funding round and beyond, price to sales (P/S), price to book (P/B) and price to earnings per share (P/E) are common comparative analysis multiples used to value blockchain private equity. The valuations of some private crypto companies are astronomically higher than the FANG stocks. For example, one crypto company raised capital with a P/E ratio of 110.
To put this into comparison, Apple’s P/E ratio during the coronavirus was hovering around 24 but reached a maximum of 41.93 in December 2020. However, this is comparing apples to oranges to some degree. Nevertheless, VCs backing startups at multiples near record highs implies that those investees will have to generate more capital than they received — and they will have to do so in a highly volatile environment.
To learn about which sectors these trendsetting blockchain VCs think will be hot in 2021, read the full report. The report also covers the tax implications of investing in blockchain private equity in various countries, how to do discounted cash flow analyses for exchanges that go public like Coinbase or Kraken, and the benefits and risks associated with tokenizing the shares of a fund.
Cointelegraph Consulting offers bespoke research on digital assets and distributed ledger technology. Our services range from educational seminars, in-depth written reports, and consulting on enterprise blockchain implementation strategies.