MMC Ventures release their latest research on the UK’s blockchain ecosystem
MMC’s latest report ‘Crypto Winter or Crypto Spring? Reasons to be Optimistic about the UK’s Blockchain Ecosystem’ provides a detailed analysis of the UK’s equity-funded startups. While 2,700 blockchain companies have been created in the UK since 2008, only 9% of these have been equity funded. Initial Coin Offerings (ICOs) had been the ‘go-to’ source of funding for blockchain companies until early 2018. However, as the ICO funding model has become increasingly difficult since the crash in crypto prices at the beginning of 2018, companies are shifting back to equity finance and placing a greater emphasis on company fundamentals.
As the ecosystem has matured, investors have paid attention. More than 85% of the equity funding for UK blockchain startups has occurred since 2017. In 2019, startups attracted £168 million in equity funding – the second strongest year for blockchain startups raising equity capital.
Through 2020 and beyond, the Covid19 crisis is likely to impact funding activity for all early-stage companies. That said, the increasingly pragmatic, business-case-first approach of the teams in the blockchain/ crypto space makes them relatively well-positioned to weather this downturn, compared to previous periods of weakness in the funding environment.
Unsurprisingly, the report finds that financial services remain a core focus for UK equity-funded blockchain companies, with 6 in 10 B2B (businesses selling to other business customers) focused startups serving the financial sector. But companies across various verticals are increasingly investing in the technology. Supply chain management is a core use-case for blockchain technologies. The media and advertising sectors are also seeing strong levels of activity, with 11% of blockchain businesses targeting this vertical.
The Covid-19 crisis underscores the need for true digitisation (as opposed to merely replicating offline processes on a digital medium) across all industries by showcasing the vulnerability of the current system, and blockchain technology is compelling as an enabling architecture for digital transformation.
Author, Asen Kostadinov, commented:
“While capital may be less abundant than it was during the ICO bubble, resources are being deployed more efficiently and targeted at fundamental areas of the technology stack. The innovation occurring at the infrastructure layer over the past 18 months might not be as easy to appreciate from a distance, but it is laying the foundations for more sustainable growth in both business and consumer adoption.
The growing share of ‘live’ blockchain, or ‘blockchain-inspired’, deployments suggests we are seeing the first signs of maturity in the technology. While it took the internet approximately 30 years to become ‘usable’ by businesses, blockchain has made that transition in a third of the time.
At MMC Ventures, blockchain will continue to be an area of research and investment focus. We back entrepreneurs that are changing industries at the most fundamental level and we believe that applications of blockchain technology in the enterprise will have that kind of transformative impact in the coming years.”
You can download the full report at www.mmcventures.com/blockchain/.