Do recent company valuations confirm crypto is here to stay?
By Žiga Kraševec, Business Development at Bitstamp
The demand for fintech exploded last year with $44.4bn injected into financial technology start-ups ($1.1bn in 2009) and investors betting these companies will topple traditional banks, established payment processors and, in some cases, entire financial systems. Crypto and blockchain companies are also a part of this hyper growth industry. In Q1 2021, 129 crypto and blockchain startups received about $2.6bn in funding, showing no signs of reduced investment appetite, and with valuations that confirm bullish sentiment.
Let’s look at recent valuations by starting with the obvious moneymakers in the crypto industry - exchanges. Coinbase’s recently published financial results of Q1 2021 ($1.8bn in revenue, $1.1bn adjusted EBITDA, $800m profit and $223bn Assets on Platform) were quite surprising. But perhaps even more surprising was the $100bn valuation price tag. Coinbase’s US rival, Kraken, is also looking to go public next year. They are currently in talks with investors for a new round of funding, which could reportedly value it as high as $20bn. And a significantly smaller player, Vienna based crypto broker Bitpanda, was recently valued at $1.2bn.
Other crypto industry segments have also received generous funding and valuations in recent weeks. Blockchain.com, a popular cryptocurrency wallet, block explorer and also an exchange service provider has raised $300m in a Series C round, reaching a surprising $5.2bn valuation. BlockFi, a financial services company offering lending and borrowing on crypto assets, completed a $350m Series D at a $3bn valuation. Chainalysis, the blockchain analysis company, secured a $100m Series D round, bringing its valuation to over $2bn. Dapper Labs, the company behind CryptoKitties and NBA Top Shot, reportedly holds a $2.6bn valuation. Fireblocks, an all-in-one platform to store, transfer, and issue digital assets, has received $130m in a Series C round. Although the company hasn’t yet reached a $1 billion valuation, it is close to it. This investment list could be expanded but I think it sufficiently portrays how investors feel about this emerging field of technology.
I see this as another form of legitimization of the crypto space as well as an indicator of further growth. VCs usually don’t invest in low-growth segments. At the same time, they also avoid the very early phases when market demand is still unknown. They invest in industries where most companies will grow in the near term, which is what I’m expecting in the crypto and blockchain space.
On the other hand, I am working at a crypto exchange and have my own skin in the game, so I’d love to hear your opinion on this. Please share your thoughts on recent investments and valuations. Do you think they will further reinforce that crypto is here to stay or are we building a bubble and it’s just a matter of time before everything implodes?