Blockchain and Distributed Ledger Technology (DLT) are considered major emerging elements in FinTech. In fact, this technology, often connected to the concept of a 'Value Internet,' has the potential to be more than simply the underlying technology of digital tokens; instead, it is capable of empowering and reshaping various sectors. Just like the phrase 'trust machine' which many uses to interpret blockchain, on a structural basis it is able to reform the productive relationships among different parties like individuals, enterprises and government, to control costs and elevate efficiencies.
Many believe this so-called 'trust machine' will become a key instrument of the commercial and social economy, just like cloud computing, mobile economy and artificial intelligence in the recent past.
Gartner predicts that the worldwide value-add of blockchain businesses will grow to slightly over USD 176 billion by 2025, then rush to more than USD 3.1 trillion by 2030.
What makes China, Switzerland and Singapore different?
In the three '20 in 20' articles we published targeting the blockchain industry, we selected three worldwide new hubs – China's metropolises, Switzerland's Crypto Valley, and Singapore – and talked about their favorable climates for blockchain startups to root and develop, compiled lists of the best-funded startups, and walked through the PE/VC investment patterns in blockchain for each of the markets.
Generally speaking, we could see that all three countries have fertile foundations and support from all the different parts of the landscape. For example:
In China: the sophisticated network infrastructure, leading position in the entire FinTech industry, and its 'national strategy' level set by the government;
In Switzerland: strong historical roots of the financial services, highly advanced economy and innovative level, sound data security and protection infrastructures;
In Singapore: a worldwide financial center and the most crypto-friendly nation in Asia, leading position in global digital competitiveness, the national 'Smart Nation' strategy giving blockchain technology a huge space to develop.
Details in the original articles.
The blockchain industry cooled down in 2019
According to Crunchbase and ITjuzi data, PE/VC investment in the blockchain industry in China, Switzerland and Singapore plummeted in 2019, after the bubble year of 2018.
Among the three, the Chinese market inflated the most in 2018; next, both the total dollar volume raised, and the number of deals closed in 2019 represents about 25% of the amount in 2018. This percentage was at 50% and 60% respectively, for Switzerland and Singapore.
Actually, the downward trend in PE/VC investments in the blockchain industry has tended to be a worldwide phenomenon. The three selected countries are not exceptional. However, this fact is not all bad in so far as the market has started to return to a more rational tempo.
The blockchain industry is in an emerging stage
We see that the early rounds of financing occupied the major series in the blockchain industry in all the three selected countries. In the current phase, we find projects germinating rapidly and dying almost as quickly after.
The Chinese market is slightly mature compared to that of Switzerland and Singapore; yet, from the perspective of the distribution of funding rounds, the difference is not significant, especially if we calculate the average amount of funding.
Though a majority of funding events in the market of all the three countries are in the seed round and angle round, the average capital raised per single funding event tends to be considerably high, as compared to what a tech startup generally could raise in a very early stage of its business.
Among the three countries, this volume in the Swiss market is incredibly high, and probably also the highest worldwide.
Various applications of blockchain technology have attracted PE/VC's attentions
In our '20 in 20' series of articles on blockchain, we see that more and more startups exploring blockchain applications other than cryptocurrencies are attracting more and more interest from risk capital. This is a good sign apparently; suggesting the industry chain of blockchain in the three countries is becoming increasingly structured and complete.
Though cryptocurrency and financial services still make up a big category that PE/VC investments flow to in all the three countries, each domestic market also demonstrates its own unique characteristics: the ventures seem to hold a particular interest in the blockchain applications of media and communities in China, industry applications in Switzerland, and infrastructure and protocol in Singapore.
Other worldwide hubs to be covered in the future
Among the top 10 countries that led blockchain investment in 2019, there were definitely other markets from around the globe represented, with their unique environment, ecosystem and characteristics differing considerably from the three selected ones.
Keep an eye on EqualOcean for further insights into global blockchain evolution – soon!