Hunting for crypto unicorns

This week, on Tuesday, Bitcoin’s price set a new all-time high of more than $50,000. This week, on Friday, Bitcoin’s market cap exceeded $1 trillion. This week, on Saturday, Bitcoin’s price set another all-time high, crossing $57,000. What a week it’s been. Certainly, we are going to see more weeks like this one ahead in 2021. The corporate world is validating bitcoin. Bitcoin currently is worth roughly $225 billion more than Tesla, the company that responsible for the recent surge in the cryptocurrency’s price. Payment giants, Square and PayPal, let their users buy and sell it. Credit card processors, Visa and Mastercard are also embracing cryptocurrencies. More and more institutional and retail investors are getting into bitcoin and cryptocurrencies. But surging prices are not the only thing you can expect to see. Venture capital investment in this space is going to heat up even more, as investors look for the next crypto unicorn.

Ilias Louis Hatzis is the founder and CEO at Kryptonio, a “keyless” non-custodial bitcoin and cryptocurrency wallet, that lets users manage bitcoin and crypto, without private keys or passwords. Sign up for our public beta and be the first to get the safest cryptocurrency wallet.

Although the Bitcoin white paper is now more than 12 years old, we are still very early in the crypto movement. Crypto is poised to be the next major computing platform and everyone is starting to realize this. Bitcoin, as well as blockchain technology, smart contracts and artificial intelligence are the major drivers of disruption in the coming years.

Unless you’ve living in a cave for the last few months, it’s been impossible not to follow bitcoin’s price. As the price of bitcoin continues to rise, venture capital firms are paying attention.

Crypto is increasingly becoming the target of some of the best venture capital funds, and for good reason.

Looking at the stories in news for the last twelve months, you’ll read articles: “USV Announces 30% of Core Fund Investing in Crypto Startups“, or “South Korea’s Hashed Raises $120M Venture Fund for Crypto Deals” or “VC Andreessen Horowitz Crypto Fund II raises $515 million” and many more just like these.

Early this month, the former Digital Currency Group (DCG) Vice President of Investments, Travis Scher, announced a $72 million crypto-focused venture capital fund, backed by the billionaire investor Paul Tudor Jones and hip-hop star LL Cool J.

Bitcoin’s bull market is fueling another boom in crypto startup deals. Data from The Block shows a record $900 million was invested in blockchain startups in Q3 of 2020. Investors rushed to bootstrap decentralized finance projects in particular, including those focused on portfolio management, lending, and derivatives. Since the first bitcoin was mined a more than a decade ago, whenever its price hit new highs, venture capital firms have stepped up their investments.

Based on data from Crunchbase and Coindesk, the research team at Grom found that the average amount invested in Series A rounds for crypto startups was $10.4 million in 2020.

Chris Dixon that leads the crypto fund at Andreessen Horowitz’s has called this the “crypto price-innovation cycle.” It works like this: Bitcoin and other digital coins rise in value, sensational news reports follow, entrepreneurs and developers take an interest, and venture capitalists invest in them.

It’s not just VCs that have sought exposure to blockchain either. Family offices and hedge funds have also taken an interest in the space. Harvard University’s investment arm joined with another two investors in an $11.5 million investment in crypto company Blockstack.

There’s already a ton of new startups that are leveraging blockchain technology and we’re going to see even more entrepreneurs get into the space.

There are currently over 27 fintech unicorns worldwide, with crypto platforms such as Robinhood, Revolut, and Coinbase riding a wave of mass adoption and market growth well beyond the billion-dollar mark.

US-based companies such as Dharma, a blockchain-powered bank that enables users to earn interest on digital dollars, such as USD Coin and Dai; 0x, an open protocol that enables the decentralized exchange of assets on the Ethereum blockchain; and dydx, an open trading platform for crypto assets have raised capital from VC firm Andreessen Horowitz, as well as blockchain funds Polychain and Pantera Capital.

Plenty of European startups are also profiting from the boom. This should come as no surprise, as Europe is home to several of the top firms in crypto, from Wallet firm Nexo to security startup Ledger and token lending platform Aave.

The “Crypto Valley” ecosystem in Switzerland is home to 800 active companies, which employ more than  4,000 professionals and to six Unicorns (Ethereum Foundation, Cardano and Dfinity Foundation, Bitmain, Cosmos Network and Polkadot).

Here are some of European startups that I’ve been tracking and I think will hear more about in the future:

  • Nebeus is a company bridges the gap between crypto and cash, providing people with instant crypto-backed cash services for everyday use. Nebeus offers a host of secure and compliant solutions allowing customers to borrow, earn, send, and receive cash and crypto with full security.
  • Coinrule is the smart assistant for cryptocurrency trading, allowing users to take full control of their trading while being able to fight back hedge funds and automated bots. As per the company’s claims, it is simple and with no coding skills required.
  • Ziglu, the personal money app offers an account with traditional & digital currencies managed seamlessly in one app.
  • Argent is an Ethereum wallet for iOS and Android. With this platform, users can earn interest and invest; borrow, store and send. The platform also lets users access DeFi and Dapps in a few taps.
  • Copper is a company that provides custody and prime brokerage services to more than 200 institutional clients, including traders, wealth companies, private banks, family offices and cryptocurrency funds.

Startups in specific crypto sectors are attracting a lot of attention. Decentralized finance (DeFi) is one emerging area that had gained a strong following among investors, who are betting that traditional banking services can be securely provided based on blockchain ledger technology. Another is security solutions, that will ease the minds of worried crypto investors. Also, non-fungible tokens (NFTs), a class of tradeable digital assets that often take the form of digital artwork or collectibles.

Only those who will risk going too far, can possibly find out how far it is possible to go – TS Eliot

These words reflect venture capital’s growing appetite in crypto startups. We are at the beginning of a revolution, with insane amounts of capital flowing from legacy institutions to bitcoin and alternative coins. This year is we’re going to see greater adoption and venture capital investment in crypto startups, especially in applications that have both an intuitive user experience and a clear technological edge.

Image Source

Subscribe by email to join the other Fintech leaders who read our research daily to stay ahead of the curve. Check out our advisory services (how we pay for this free original research)

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.