VCs share their perspectives on the Blockchain investment space

Although a small drop in the ocean compared to other industries, Bitcoin and Blockchain startups have been steadily growing in both the number and size of deals.

We might not have got any of the five predicted Bitcoin or Blockchain Billion-dollar Unicorns in 2016, but Blockchain – the underlying technology behind Bitcoin and other Cryptocurrencies – now attracts more funding than Bitcoin itself.

As well as fintech investment, companies like Microsoft and IBM are now offering Blockchain-as-a-Service, demonstrating there’s more to the technology than just cryptocurrencies.

Speaking at this year’s IoT Tech/Blockchain Expo, three Blockchain investors spoke about what makes the technology appealing, and the current state of the funding landscape. The speakers were:

  • Jean-Marc Bonnefous, MD, Tellurian Capital an investment company operating around the technology and fintech space
  • Eddy Travia, CEO, Coinsilium, a Blockchain startup accelerator
  • Jamie Burke, CEO of Outlier Capital a Blockchain venture fund and Blockchain Angels a network dedicated to educating investors about the Blockchain


On what makes the technology appealing:

Travia: It is actually a far reaching and becoming a foundation of technology a bit in the way the internet was back in the 70s. The first application that we knew of from the internet was email, and I think in many ways Bitcoin can be associated to email; being this first, easy to use, easy to get application of Blockchain.

Bonnefous: The technology of Blockchain can enable new business processes, it's a higher level of integration. If you stop at sharing ledgers, it would be nothing more than a sexy database.

Burke: If you think about what Web 2.0, aside from retail and media, it hasn't really changed the world that much. Organisations are still very centralised, they're still heavily human-mediated, and that means they're slow.

Blockchain technology represents Web 3.0: it's a technology stack that enables us to move from a centralised world to a decentralised world, and you start to remove people and automate processes and functions through smart contracts. With IoT, you have an infrastructure that will enable it to scale, and scale securely.

What kind of numbers current funding rounds look like:

Travia: At the seed stage I think we're still looking at valuations around $1 million - $3 million. The geographical factor is quite important; US companies are usually valued more than European companies.

Series A can go quite high. We invested in Factom, they recently closed their series A with Tim Draper and the valuation was $30 million, which is a good level, especially in that space

Challenges around funding:

Travia: It's still living more in its own community, in its own bubble. A lot of early stage Blockchain companies are actually being funded from the community. You need to look to grow outside the community to be adopted at a worldwide level across different industries.

Burke: There hasn't been a lot of VC activity because there aren't enough mature startups in this space. That's dramatically changing.

There has been a Bitcoin bias. Now that's changed, there is a shift as they start to see the various applications.

Bonnefous: You need to get the message right in terms of what problems that you solve because if you don't it will be more difficult.

Advice to funders:

Travia: Blockchain is a foundational technology; you're investing today but it doesn't mean next year will be huge results and benefits for everyone. This is the kind of technology that will take some time to get the results you're expecting to get.

Bonnefous: Some fairly significant players are starting to get interested; it's almost like Blockchain as an industry has successfully passed the proof-of-concept stage for the big investors.

Burke: if you're buying Blockchain you're going to make a bad investment decision. It needs to be about the business and the team, and the use case. In some cases, Blockchain makes sense, and in some cases it doesn't.

There might not be one [a killer Blockchain app] for a long time. The killer app, when it does happen, probably won't be in the developed world. It's going to happen in Africa, or southeast Asia, or India.


Also read:
What’s a blockchain? And is it heading for prime time?
What can Blockchain bring to security?
Are we overdue a Bitcoin Unicorn?
Hype vs. reality: We investigate the potential in blockchain
5 things you should know about the blockchain


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Dan Swinhoe

Dan is a journalist at CSO Online. Previously he was Senior Staff Writer at IDG Connect.

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