tl;dr As expected, investment into bitcoin-related startups is not dead. *insert panic among the haters.
Investment into bitcoin startups appears healthy this year, reversing a noted slowdown that occurred towards the end of 2015. Several recent rounds indicate that investor sentiment about bitcoin, and related technology, is healthy.
As you can imagine, that’s good news for bitcoin fans and believers, and a likely shot in the arm for the cryptocurrency. Bitcoin has made news in recent weeks concerning its internal soul-searching about the future of its core technology. New dollars implies that the people taking a close look at bitcoin, and bitcoin-related efforts aren’t worried about that particular brouhaha.
Quickly, where has money landed? CoinDesk has its usual strong collection of recent bitcoin funding data. To preserve its formatting, here’s 2016 so far, according to the publication:
Using only that data, January saw $58.49 million in freshly deployed capital. Not bad, and on a quarterly basis on par with prior, strong quarters. Keep in mind that the last quarter of 2015 saw less than $30 million invested into bitcoin-related startups in aggregate. That was a core facet of the handwringing that ensued as 2015 came to a close.
It isn’t hard to estimate that bitcoin-related companies could accumulate $100 million in new capital in the first quarter of this year, given year-to-date performance. That’s not an all-time high, but it’s certainly sturdy.
Mattermark previously emphasized the fact that investment into bitcoin has been somewhat lumpy; large rounds can make a quarter look stronger than it was, and some quarters that saw strong deal flow but no mega-round can appear weaker than they were:
Coinbase, for example, raised $75 million nearly exactly a year ago. Bitfury raised $20 million last July, and Circle’s $50 million came last April. That’s a lot of capital deployed in early 2015, which serves to skew investment inflows towards the first half of the year. Given that, the lower totals of later 2015 make a bit more sense; the slowdown wasn’t bunch of $5 million Series A rounds that suddenly went dry.
The situation asks an interesting question: will the mega-rounds continue? Until the largest startups raise again, or fail to do so, we can’t put a perfect point on market sentiment concerning the bitcoin ecosystem. If any of the majors raise again this year, the dollar sum would presumably be large enough to salvage, if you’ll excuse the word, that quarter’s investment tally.
So, that’s that.
As a small final note, another bitcoin-related company picked up several million this month. So, February is not dead so far. That means the quarter continues apace. Bitcoin! Not dead yet!