Blockchain Venture Capital Investments Grew Exponentially In 2018 Compared To 2017
Blockchain VC Investments Grew Exponentially In 2018 Compared To 2017
Blockchain technology has the potential to change and improve many different industries all over the world. This is something that several investors and analysts believe. This enthusiasm for distributed ledger technology (DLT) can be seen in the number of funds invested by VC companies in blockchain and crypto companies during 2018.
VC Companies evaluate the new technologies and separate those companies that are going to provide innovative solutions from those that are working on derivative projects. According to a recent research released, the number of VC blockchain deals doubled from October 2017 to October 2018.
At the same time, according to Pitchbook, VC investment in the crypto and blockchain space in the United States increased year over year from 2013 to 2017. Only in 2018, the number of funds raised to $2,423 million.
In a recent report released by Hard Fork, they’ve reached different companies and figures in the space to be able to understand what they are searching for at the time of investing in blockchain technology companies.
According to Zihao Xu, from Octopus Ventures, he had his first contact with Bitcoin when each coin was worth around $5. He mentioned that he was always thinking of ‘denationalized’ money since he started his University. He explained that at the very beginning, those using the most popular digital asset were Bitcoin enthusiasts interested in the code, speculators and libertarians.
About it, Xu commented:
“I no longer think blockchains are the most elegant or suited type of database. In fact, the idea of using a blockchain to distribute a database is probably the crudest one conceptually – giving every node a full copy of the entire database is old-fashioned.”
Xu is currently searching for viable blockchain solutions to achieve mainstream adoption. That means that he is avoiding companies that are using distributed ledger technology (DLT) just to attract investors. However, there is just a small group of projects that are able to fit this criterion.
Jamie Burke, the CEO of Outlier Ventures, mentioned that he is bullish since the very beginning about the potential of blockchain technology, He explained that it is surprising how quickly startups rushed to codify assumptions into their design before testing them.
At the moment, the cryptocurrency market is in a bear trend. Burke says that he thinks the current crypto winter will be very positive for the future of the digital currency space.
Burke said that they’ve spoken with around 1500 blockchain startups since they’ve started to found companies. However, some of them do not go beyond the first round of due diligence since they do not have the experience or understanding of the industries that they want to change.
Sherman Lee, a partner at early stage accelerator program Zeroth AI, is also bullish about the future of blockchain technology. After discovering Bitcoin in 2014, he started to pay close attention to blockchain technology in 2017.
“During the great bull run of 2017, the euphoria was incredible. Hundreds of teams kept popping up with whitepapers with amazing visions,” he explained. “As an engineer, I was quite sceptical on the ability of all these teams to deliver on their promises of 1 million transactions per second.”
After it, in 2018, the market crashed and investors were trying to understand what happened with cryptocurrencies. Several investors believed that virtual currencies were dead. However, he never thought in this way. According to him, he saw real technology being built and incredibly talented people all over the world.
Now, after the bear trend, only the most prepared teams keep in the space and all the noise around several projects is now gone. It is currently time to build the space with the remaining teams.
Will Orde, a technology investor at Oxford Capital has also been giving his opinion about the current state of the market. He entered the space when Bitcoin moved between $200 and $500. During the bull market in 2017, Oxford Capital started to explore possible applications of blockchain technology.
At the moment, he is focusing on use-cases related to the creation, sharing and management of data in multi-party situations. However, Orde said that he is not interested in companies that are trying to solve a problem. Furthermore, they are searching for firms that have a clear vision of what they want to build and have the ability to get things done.
Another investor is Alicia Garabedian, who heard about Bitcoin back in 2015 when she was working at Morgan Stanley. Nevertheless, she started to work in the blockchain industry when she joined Samsung Next. She did not know whether cryptocurrencies were speculation or not and how blockchain technology really worked.
Nonetheless, this changed when she started to learn more about it. Now, she is currently searching for blockchain companies focused on enterprise implementation and consumer adoption.
About it, she commented:
“We are interested in deep, enabling technology that capitalizes on the potential of blockchain. We look at companies that are doing something new and innovative with blockchain, as opposed to leveraging it as, say, a data store.”
For her, distributed ledger technology is useful when there is an issue related to the lack of distribution among a specific organization.
In the future, blockchain companies will continue to expand in a very competitive crypto market. There are many firms that are starting to implement different DLT solutions to improve their services and products in the market.
However, Initial Coin Offerings (ICOs), that experienced very positive growth in 2017, have stagnated and might never gather again such large sums of money. The future looks bright for blockchain technology and for digital assets as more and more enterprises know about it and invest in it.