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PwC Reports Huge Shift in M&A and Fundraising from US to Asia and EMEA in 2019

In 2019, crypto fundraising and M&As began migrating over to Asia, Europe and the Middle East and saw a lack of new VC investments as the majority of funding came from crypto firms within the industry, according to PwC’s latest report released on April 6.

PwC Global Crypto Lead, Henri Arslanian discussed the 2nd Global Crypto M&A and Fundraising Report’s findings with Blockchain.News and offered his take on what they mean for the digital ecosystem.

Crypto fundraising and M&A moving to Asia and EMEA

As outlined in the report, the majority of global crypto fundraising and M&A deals in 2019 took place outside of the United States with increased activity in both APAC (29%) and EMEA (22%) recorded.

In 2019, it was found that traditional VCs, crypto-focused VCs and family offices represented the majority source of new funding, with a share of 57%, for crypto companies. These new findings mean that crypto firms now represent the majority of M&A in the sector which is an increase compared to 2018’s 42%.

Arslanian said, “We expect to see APAC and EMEA play a bigger role in the global crypto fundraising and M&A space. In particular, we expect to see more APAC and EMEA based family offices looking at the market turbulence as a good time to invest in promising crypto companies.”

In total, the number of M&A deals recorded in the report dropped from 189 in 2018 to 114 in 2019, while the actual value of M&A deals plummeted by 76 percent from nearly two billion dollars to just under half a billion. Arslanian commented, “The crypto industry is not immune to the global headwinds and the number and value of crypto fundraising and M&A deals may be impacted in 2020.”

Top 5 Investor Deals in 2019 Compared to 2018Per the report, while 2018 saw traditional VCs andincubators among the top investors, 2019 saw a contrast with the majority of funding provided by crypto-focused incumbents like Coinbase and ConsenSys.Source: 2nd Global Crypto M&A and Fundraising Report

Crypto Companies Offer Complimentary Services to their Core business

Whilst 2018 saw a lot of crypto fundraising in blockchain infrastructure projects or M&A in the crypto mining space, 2019 saw a rise in investments in solutions for the crypto ecosystem like compliance and regulation; as well as M&A activity in the crypto service providers.

“We expect to see further consolidation in 2020 with some of the larger or more profitable players acquire firms that offer ancillary services to their current offering in areas like crypto media, research or even compliance,” said Arslanian.

PwC’s Global Crypto Team  

These latest insights come from PwC’s Global Crypto Team which has continued to lead research in the space since its inception. Henri Arslanian discussed the ever-growing role of his team in interview with Blockchain.News in January.

In the last 2 years, PwC has conducted over 320 crypto engagements globally, spanning across 15 different countries. “I think it’s very exciting to see how PwC is getting involved in the crypto ecosystem,” said Arslanian. “Our purpose is to build trust in society and solve important problems and there is a big need for that in the crypto and blockchain ecosystem. We set up this PwC crypto team almost three years ago as the crypto ecosystem was growing, to support crypto firms not only on areas like strategy or fundraising but also on day-to-day functions such as crypto accounting, tax or KYC/AML reviews.” Arslanian believes that firms like PwC are essential for the ecosystem to “go from 1.0 to 2.0,” and “that PwC has a big role to play.”  

China’s Blockchain and FinTech Sector to Brace for 'Capital Winter' Even After the Coronavirus Pandemic Subsides

Investment activity in China’s tech sector has seen a massive drop in the past four months since the coronavirus outbreak has emerged from the city of Wuhan. The venture capital market has been suffering a tremendous impact on its existing drop in activity. The epicenter of the pandemic, Wuhan, has eased its lockdown measures and is now open.

Tech-based industries, including FinTech, artificial intelligence, and web-based services have seen a 31.3 percent decline from 173.5 billion to 119.1 billion in Q1, in the same period as last year. Investment deals have also seen a dip, from 1,143 to 634 in the same period, resulting in a 44.5 percent decline.

According to a report by Itjuzi.com, In 2019, 3161 startup companies were founded, while in Q1 of 2020, less than 100 startups were founded, which was around 3 percent of companies founded last year. Of those 100 startups, many were founded in January before the COVID-19 outbreak. The report further suggested that startups in artificial intelligence and e-commerce continue to attract funding, as shown in the first quarter.

Xu Miaocheng, investment vice president at Chinese venture capital firm Unity Venture said, “There is already a downturn in the number of new tech startups in the past two years, and the number is further declining in the first quarter because of the coronavirus outbreak. Under those circumstances, VC firms are continuing to stick to the conservative investing strategy that they had in the past one to two years.”

China has already been in a trade war with the United States and already has experienced a rocky economic outlook. Analysts have deemed China to be going through a “capital winter,” describing the significant slowdown in fundraising activities since 2018, signaling a longer decline even after lockdown measures have been eased.

However, there is still hope. Major venture capital firms including Sequoia China, which has invested heavily in the blockchain sector continues to remain active in investment despite the coronavirus pandemic. Sequoia China made 23 investments in the Q1 of 2020, while other major firms including Tencent and Addor Capital has invested in 17 and 16 respectively.

Image via Shutterstock

Blockchain-Focused Fund COSIMO X Acquires Seven-Figure Funding from RIT

COSIMO Ventures, an investment firm situated in Boston and Dublin, recently announced that the Rochester Institute of Technology (RIT) has endorsed them with a seven-figure investment.

The company disclosed in a recent securitized announcement with Blockchain.news that the venture capital firm was working on developing their new blockchain-focused tokenized trust, dubbed COSIMO X.

Managing Partner of COSIMO Ventures, Robert Frasca asserted that this was the first time any university in the United States had ever directly invested in a tokenized venture fund, making RIT the first university to hold a direct tokenized economic interest in a digital security firm. He also went on to express on behalf of COSIMO Ventures that with RIT’s funding, the investment firm hoped to achieve new heights of growth and breakthrough in the development of decentralized software protocols.

The Managing Partner also backed the newly instilled blockchain-focused tokenized fund—COSIMO X—and expressed this as a great opportunity of growth for his firm’s investors:

“We believe that the growth that we can foster as an investment firm will be what really resonates with our investors. Once the market fully understands the benefits of tokenization as it relates to fund investing, a structure like ours might become the market standard.”

Blockchain Future Powered by COSIMO X

COSIMO X, the blockchain-driven fund developed by COSIMO Ventures, is focused on investing in emerging businesses that utilize digital assets and blockchain protocols. Through these means, they hope to fuel and help the growth of the emerging digital economy. With exposure to companies working in regulatory technology industries, new digital asset creation sectors, and market infrastructure platforms, the COSIMO X fund is focused on utilizing financial technology as a tool to revolutionize and dominate the market.

COSIMO X Tokens, which are utilized on the blockchain platform, are representative of economic interest in the evergreen fund in this case and are found via the Securitize powered COSIMO X website. The tokens can be purchased by institutions, international investors, and US accredited investors.

Ethereum and Venture Capital

With fintech on the rise, startup companies that are funded by venture capital firms are integrating blockchain platforms more and more into their business ecosystem. As reported by Leadblock Partners, Ethereum seem to be a popular choice among European blockchain startups. Companies favor this particular blockchain network, because it offers robustness, scalability and overall stable architecture.

Brock Pierce and Blockchain Capital Sue Florida-Based Company for Copyright Infringement

Brock Pierce and his business partners are suing Blockchain Capital Management LLC (BCM) for copyright infringement.

Together with Bart Stephens and Bradford Stephens, Brock Pierce co-founded Blockchain Capital in 2013. Blockchain Capital filed a complaint with the District Court of Florida against Blockchain Capital Management LLC for using the same name to conduct business. Though the latter thrived mainly in the financial sector, plaintiffs said that operating under the same name would bring about confusion in official documents and day-to-day transactions.

In the complaint, Blockchain Capital expressed that it would like BCM to remove Blockchain Capital from its title, as it was an infringement on the venture capital firm’s trademark. It also said that BCM and its founder Fareed Ifthikar had not responded to the venture capital company’s requests or to its letters, and consequently this led to the firm seeking legal action.

The San-Francisco based company is said to be one of the oldest blockchain venture firms in its industry, with a $13 million investment fund for Bitcoin (BTC) and more than 70 blockchain projects under its management. Through an initial coin offering (ICO), the company also managed to raise $150 million in 2018 as well.

It has been speculated that BCM will likely comply with Blockchain Capital’s requests, but at the time of writing, official details are still in the works.

Brock Pierce for President

Co-founder of Blockchain Capital—Brock Pierce—is a presidential hopeful and had previously announced his intentions to run as an Independent candidate in the 2020 US elections. Brock Pierce is a known venture capitalist and is reputed for being a successful entrepreneur, pioneering the market for cryptocurrency all the while. He has successfully raised more than $5 billion for venture capital firms he took under his wing. Speaking about his aspirations during his campaign announcement, Brock Pierce had said:

“Entrepreneurs are essential to the rebuilding of this nation that we love, and I’m running in this race because I know that together we can help build a pathway towards the rebirth of the America we love so much.”

Recently, the Blockchain Capital co-founder announced that he had recruited Akon as a chief strategist for his presidential campaign run. The Grammy-nominated artist is also quite a crypto pioneer himself, as he is working on building a cryptocurrency-run city in Senegal, dubbed Akon City.

Brock Pierce Served for Securities Fraud in Connection with His Blockchain Company Block.one During Electoral Campaign

Presidential hopeful Brock Pierce was served a court summons during his presidential campaign in front of his new headquarters in New York City today. US attorney James Koutoulas uploaded a video of when the class action caught Pierce by surprise.

During a presidential campaign run that marked the opening of his New York City headquarters, Block.one co-founder Pierce was served by James Koutoulas’ legal team with a class-action lawsuit against the blockchain company. Koutoulas, the CEO of Typhon Capital Management and the lead attorney in the legal case against Pierce and his colleagues, uploaded a video of the exact moment the Block.one co-founder was hit with the suit at the presidential rally. He tweeted:

“Our team served Brock Pierce for securities fraud at his rally in NYC. Pro tip – when you’re trying to avoid getting served for a multi B fraud case, maybe lay off outlandish presidential campaigns.”

Brock Pierce, a venture capitalist entrepreneur that had helped co-found a number of blockchain and crypto projects, such as Tether, Block.one, and Blockchain Capital was caught off-guard during his presidential rally. He was charged due to a securities fraud class action suit directed against his company, Block.one.

Block.one served a second time

Back in September 2019, the US Securities and Exchange Commission (SEC) had slapped a $24 million fine at blockchain company Block.one for conducting an unregistered initial coin offering (ICO) hosting EOS digital tokens in 2019. The ICO was estimated to be worth $4 billion. The blockchain company had agreed to settle the charges and pay the civil penalty, following the SEC’s sanctions.

However, the US Securities and Exchange Commission hit Pierce along with his other co-founders Daniel Larimer, Brendan Blumer, and Ian Grigg a second time with a class action complaint in relation to violations of the Federal Securities Law this May. The official legal notice served during Pierce’s presidential rally was filed on behalf of all investors that had bought EOS tokens or received them from June 2017 to the time of writing. It read:

“This action is brought on behalf of all investors who purchased securities issued by Block.one called ‘EOS Tokens’ (the ‘EOS Securities’) during the period of June 26, 2017, to the present (the ‘Class Period’).”

Led by Crypto Assets Opportunity Fund LLC, Johnny Hong in May, and brought upon by Koutoulas’ legal team recently, the document stipulated:

“This case arises out of a fraudulent scheme, fueled by a global frenzy over cryptocurrencies and unchecked human greed, to raise billions of dollars through sales of a cryptocurrency called EOS – an unregistered security – to investors in violation of the United States federal securities laws.”

Brock Pierce –what his candidacy means for tech and crypto

This comes at a crucial moment for the Tether co-founder. Brock Pierce had announced his plans to join the presidential race on a last-minute notice on July 5. Known to be a blockchain pioneer, a venture capitalist entrepreneur, and a firm crypto and technology advocate, Pierce’s plans to join the presidential run may mean significant things for the industry. With a proven track record for building businesses from the ground up, Pierce had previously publicly disclosed:

“I’ve spent my life creating great things from nothing and I can help others do the same. Entrepreneurs are essential to the rebuilding of this nation that we love, and I’m running in this race because I know that together we can help build a pathway towards the rebirth of the America we love so much.”

Trouble in crypto paradise

On top of his active involvement in the tech industry, Pierce had also been known for creating Tether, the first stablecoin that is backed one-to-one with USD.

However, in July, the New York Supreme Court had found that Tether stablecoin empire, along with coin exchange Bitfinex were alleged to have colluded in concealing the loss of corporate and client funds estimated to be over $850 million worth. In the federal court’s ruling, Brock Pierce was not mentioned.

However, in light of the crypto venture capitalist being served during his presidential rally earlier today, Brock Pierce’s name will most likely go through public scrutiny and criticism, as the presidential election is looming close. The US elections are currently set for November 3, 2020.

Crypto Deals Catch the Eye of Bigger Players, Triggering Price Surge

Large investors are continuously showing interest in having a share of the crypto sector cake. As a result, fundraising by crypto companies has seen a surge in valuations as more prominent players push prices upwards.

Crypto deals experiencing an uptick in price

According to PWC Crypto Leader Henri Arslanian:

“Boutique firms and family offices are being elbowed out by big venture-capital (VC) names, private equity players, and even some pension funds. Smaller venture capital firms are unhappy.”

Therefore, crypto deals are boiling down to a game of the highest bidder, given that they are catching the eye of bigger players like capital pension funds and private equities. As a result, an uptick in prices is being experienced.

Arslanian added:

“Let’s say they’re looking at a deal, and they believe it’s worth $10 million, and you see large VCs come in and put a bid in for a higher valuation. This is happening a lot with very early-stage companies, say, $5 million to $20 million — the prices are being inflated.”

Crypto deals have been heating up

Crypto deals have been on an upward trajectory triggered by a surge in this market. For instance, Bitcoin (BTC) rose to the psychological level of $40K after hitting lows of $29.5K recently.

As a result, the BTC futures market heated up as funding rates flipped positive across major exchanges, pointing to significant long positions being opened.

Moreover, the Bitcoin derivatives market showed bullish signs like perpetual swaps volume topping $86 billion and open interest increasing.

On the other hand, the upward momentum in the BTC market caused some traders to be caught in a massive liquidation. Therefore, total liquidations in the cryptocurrency ecosystem topped $1 billion.

SBI, Sygnum, and Azimut Jointly Established a $75M Venture Capital Fund for Crypto Startups

Japanese financial giant SBI Group, Swiss bank of digital asset management Sygnum, and Italy’s Azimut Group jointly raised a $75 million venture capital fund in Singapore Thursday, aiming to invest in capable start-up companies in the digital asset field.

This new fund company brought together the capital of these three companies with senior experience in the field of digital assets and registered as a variable capital company.

SBI Venture Capital will assume the management position of the fund and will lock the investment target to focus on the pre-A round and A round companies who aim at the development of blockchain/distributed ledger technology (DLT) infrastructure, decentralized finance (DeFi) solutions, and regulatory technology tools.

The digital asset economy is expected to flourish in various fields in the future. According to the official announcement, it is expected that by 2027, 10% of the global GDP will use DLT infrastructure.

From SBI Ven Capital CEO and Managing Director Lin Ryosuke Hayashi said:

“DLT and digital assets are at the inflection point of mainstream adoption, and they have the potential to reduce inefficiencies and unlock new capabilities across several sectors, such as financial services and supply chain management. Amidst this backdrop, we are excited to launch this latest venture capital focused fund offering with our partners, Sygnum and Azimut.”

Statistics show that the amount of venture capital flowing into the digital asset industry this year has increased from about 5% of the total last year to 6%.

In the first half of 2021 alone, global investment in blockchain/DLT and cryptocurrency companies has exceeded 17 billion U.S. dollars, a five-fold increase from 2019.

All kinds of data indicate that the digital asset industry has entered a rapid growth in the form of exponential. The fund created by the three companies will also participate in the trend of maintaining a wide range of diversification in global investment opportunities

As reported by Blockchain.News on September 3, the Japanese Financial Giant SBI Group stated that it will launch its first cryptocurrency fund in Japan before the end of November this year to provide Japanese investors with a more diverse portfolio.

Bloomberg: Crypto Saw more Funds in 2021 than all Previous Years Combined

More funds have been invested in the cryptocurrency industry in 2021 than in the past 10 years combined, according to Bloomberg.

Venture capital funds invested about $30 billion into the cryptocurrency industry, which is almost four times the 2018 high, according to a report by PitchBook Data.

PitchBook analyst Rob Le said that:

“Investors are funding anything and everything.”

The crazy skyrocketing price of digital assets in 2021 has led to the popularity of crypto-related projects, such as blockchain game development, NFT projects, and several other experimental projects that are seeking funds.

Spencer Bogart, a general partner from San Francisco-based Blockchain Capital LLC said, “we’ve moved beyond just digital gold. We’ve got financial services, art, gaming as a subcategory of NFTs, Web 3.0, decentralized social media, play-to-earn — all of that made investors think, `We don’t have enough exposure,’”

Blockchain Capital (formerly Crypto Currency Partners) is a venture capital company. Since its establishment in 2013, it has provided financing for more than 120 companies.

Most of the venture capital firms which have made investments into the crypto industry are from the United States. The $30 billion figure includes funds raised by companies such as Robinhood Markets Inc. and Revolut Ltd., which are income-generating financial technology companies that only involve cryptocurrencies.

This year, the relatively large financing cases are as follows:

FTX Derivatives Exchange has completed a $420.69 million Series B-1 funding with participation from top investors at $25B Valuation.

The firm behind CryptoKitties, Dapper Labs has been able to raise a sum of $11.2 million, Andreessen Horowitz, Digital Currency Group, and Warner Music Group were said to be a part of the fundraising

Earlier in March, Dapper Labs raised $350 million from investors including basketball legend Michael Jordan.

Crypto payment company MoonPay has raised $555 million in its first-ever Series A funding round, earning the firm a unicorn valuation of $3.4 billion.

Venture Capital Firms Almost Quadruple Previous High by Pumping $30B into the Crypto Industry in 2021

Venture capital firms kept a keen eye on the crypto industry to the extent of pouring $30 billion in this sector in 2021.

Market analyst Holger Zschaepitz confirmed:

“Crypto attracted $30bn of venture-capital funding in 2021, more than in all other years combined. VC money almost quadruples previous high of $8bn in 2018, the year following Bitcoin’s 1,300% breakthrough gain.”

Zschaepitz added that the current venture capital funding is nearly four times its previous all-time high of $8 billion recorded in 2018.

Mason Nystrom, a research analyst at Messari, previously noted that as cryptocurrencies continued gaining steam, crypto company fundraising hit $8.2 billion in the third quarter of this year.

Meanwhile, Jackson city in Tennessee has eyes on becoming the first town in the United States to add cryptocurrencies as a payroll conversion option for its employees.

The city’s mayor Scott Conger acknowledged that plans were in motion to permit third-party platforms to offer cryptocurrency converter services through the recently opened request for proposal (RFP).

Conger noted: “the RFP is open, and the 22nd is when the respondents have to respond to the RFP. So once the 22nd hits, we’ll open the bids, have the committee, and then they’ll review it. They’ll probably make a recommendation to the council in February.”

On the other hand, cryptocurrency firms are seeing Singapore as inhospitable based on legal and operational difficulties, according to a recent Nikkei Asia report.

According to figures released by Singaporean regulators, more than 100 of around 170 cryptocurrency businesses that applied for licensing have been turned down or withdrawn their applications. While many more, operating under exemptions, face an uncertain future.

Japanese Asset Manager Nomura to Launch New Digital Company

Mainstream Japanese asset manager, Nomura Holdings Inc, has announced its plans to transform its Future Innovation Company into a full-fledged Digital Company.

According to the firm, the timeline pegged for this transformation is pegged at April 1 this year.

“This is an important next step in our digital evolution,” said Kentaro Okuda, Nomura President and Group CEO. “Digital technology is a critical part of our strategic drive to expand our operations in private markets. The new Digital Company will lead deeper collaboration among internal and external stakeholders, accelerate our uptake of digital technologies, and enhance our client services.”

Nomura’s Future Innovation Company has set a lot of impressive strides when it comes to pioneering the development of digital services.

The current plans to spin an entirely new outfit from this offshoot is hinged on the company’s plans to tap into the fast-growing digital assets space. Nomura believes in new use cases emanating from the blockchain and crypto ecosystem. It can bring in new value propositions to its clients, partners, and the industry at large.

“Digital assets such as cryptocurrencies, security tokens, and non-fungible tokens are gaining presence as a new asset class. The fusion of innovations stemming from distributed ledger technology with traditional finance gives rise to a new range of services. By tapping into this, Nomura aims to expand its private markets businesses and broaden its services in focus areas including sustainability and decarbonization,” the announcement reads.

Nomura has had a long-standing interest in the digital currency ecosystem. The company invested in Crypto Garage, a Tokyo-listed Digital Garage subsidiary, back in October last year. The company’s approach to going full steam into the digital currency ecosystem echoes a related effort from other major Venture Capital firms to be a part of the growth of the up-and-coming cryptocurrency industry.