The events during the first half of 2020 shocked the global economy, stock markets were highly volatile, asset risk was on the rise, and fear of asset shortages increased every day. Despite this dismal backdrop, PAData’s figures clearly show that investment in blockchain projects across the globe continued its rapid growth.

4% YoY Increase in Number of Projects Financed. YoY Total Investment Increase of 113%

A total of 169 blockchain projects across the globe received financing during the first half of 2020. Investment firms and individuals displayed their confidence in the blockchain industry by investing on 170 different occasions. Among these were 151 VC investments, 13 acquisitions, and 6 other forms of investment. Due to the fact that there were far fewer acquisitions and other forms of investment and that much less information about them has been disclosed, this report focuses primarily on VC investments.

The data reveals that in the first half of 2020, VCs made 151 investments in blockchain projects, a YoY increase of roughly 4.14%. This shows that the total number of investments did not increase all that significantly, however, the total amount of money invested is a different story.



Despite increasing asset shortages across the globe, the amount of money invested in blockchain projects during the first half of 2020 grew considerably compared with the first half of 2019. The investment amount was disclosed in 100 of the 151 VC investments and disclosures show that these 100 blockchain projects alone received a total of $1.517 billion in financing during the first 6 months of 2020, an YoY increase of 113.06%.



Disclosures reveal that investment and financing in blockchain projects was highest in the month of May, a total of $498 million. Blockchain projects received the second largest amount of funding in March, a total of $387 million. Overall, the figures show that the average amount of investment and financing per month during the first half of 2020 reached $253 million.  

As previously mentioned above, this report focuses primarily on VC investments. However, it is worth noting that of the 13 blockchain project acquisitions, information from 2 of them was disclosed. These two blockchain projects were acquired for $5.7 billion, Visa acquired Plaid for $5.3 billion and Binance acquired CoinMarketCap for $400 million.

It is also worth briefly mentioning the 6 other investments which were a capital increase of approximately $11 million, one private placement (dollar amount undisclosed), and four other investments (form of investment unknown) with a total financing amount of $99 million.

The Race for Investment: Investors Prefer Exchanges and Tools. More Types of Blockchain Applications are Emerging Despite Much Less Investment

Compared with the first half of 2019, the distribution of investment and financing among different blockchain projects changed dramatically during the same period of this year.

First of all, cryptocurrency projects replaced blockchain technology as the most favored area of investment, receiving $1.008 billion in funding which accounted for 66.47% of total investment. Among this investment, cryptocurrency exchanges received the majority with a total of $684 million. Most of this investment was towards crypto derivative exchanges and licensed cryptocurrency exchanges in emerging markets. The primary investors were other cryptocurrency exchanges. Unlike in 2019, investment into blockchain technology was low. That being said, a majority of the investment that did go towards blockchain technology went into blockchain protocols with an approximate total of $50 million.



Secondly, if we look at the different types of cryptocurrency projects, we can see that crypto exchanges received the most funding, surpassing crypto asset management platforms. This shows that even though crypto brokers and digital banking tools are attractive, crypto exchanges are the real money makers in the industry. Moreover, whereas staking platforms were all the hype in 2019, they received zero investment in the first half of 2020.

Furthermore, disclosures revealed that the total funding of blockchain applications in various industries was a mere $264 million during the first half of 2020. Unlike during the first half of 2019, very little funding went towards major blockchain application projects. As public chains have died down in popularity, investors are no longer focusing on the development of dApps.

While the amount of financing received by blockchain application projects may have decreased, the application of blockchain technology grew substantially among various industries. In the first half of 2020 we saw numerous blockchain applications emerge in the financial trading sector. Some of these applications include energy trading platforms, supply chain finance platforms, and agricultural commodities trading platforms. We also witnessed the blockchain technology is being applied in human resource management, password management, and other industries such as the automotive industry.



*Note: “/” indicates that there are two subsegments. For example, “Tools/Protocols” indicates that the blockchain project contains both tools and protocols.

In terms of single transactions, investors were most enthusiastic about cryptocurrency exchanges, crypto asset management platforms, and payment platforms. The average single investment amount among these was over $20 million, far greater than in any other blockchain projects. Moreover, DeFi blockchain projects, which have been particularly popular lately, received financing on 8 different occasions during the first half of 2020. On 7 occasions the investment details were disclosed, and the average amount of financing was $7 million.

Funding Rounds: Early Investment Still Dominates. B Rounds Earn the Highest Amount of Financing.

Information regarding in which funding round the investments were made was revealed in 97 of the 151 VC investments. Of these, VCs invested during the seed and A rounds 34 and 26 times respectively. These were the most common funding rounds for blockchain investment. This shows that similar to the first half of 2019, investment in blockchain projects across the globe is still most concentrated in the early rounds of investment.



In addition, three examples show that during the first half of 2020, the depth of the blockchain project pool was deeper than that of 2019. In other words, several well-established blockchain projects announced new investment rounds in later stages. Linklogis, a supply chain financing service provider,  announced its C+ round of financing, the digital bank N26 announced its D round of financing, and the trading platform Robinhood, announced its F round of financing. Investment during these later rounds was also distributed among various sectors of the blockchain industry including blockchain technology, cryptocurrency, and blockchain applications. These are the three main sectors in the blockchain industry.

Looking at each round of financing individually, the B round raised the most funding with a total of $370 million. The largest number of blockchain projects acquired investments in their seed and A rounds of funding. These two rounds raised a total of $85 million and $162 respectively. However, the average amount that each blockchain project raised in these two rounds was only $3 million and $8 million respectively, lower than what blockchain projects in other financing rounds raised. The rounds of financing with the highest average investment amount were the F round and D round reaching $280 million and $100 million respectively. This aligns with basic investment logic in that the more established a business or project is, the more investors are willing to invest.



There were also 3 ICOs, including 1 ICO auction, during the first 6 months of 2020 raising a total of approximately $44 million. Additionally, there was one token financing (method of financing not disclosed), an ETH donation, and one STO (Reg CF) which raised  $1 million in funding. None of these methods of financing are common anymore in the blockchain industry.  

VC Investment Trends: 14 Investment Firms Invest in 3 or More Projects. Blockchain VCs Gravitate Towards Crypto Asset Management

Counting only the publicly disclosed investors, a total of 342 (institutional and individual) invested in blockchain in the first half of 2020. Of these, 14 investment firms invested in 3 or more blockchain projects. Fenbushi Capital, Polychain Capital, Pantera Capital, IDEO Colab Ventures, Digital Currency Group, and Coinbase Ventures made 5 separate investments. Aside from PolyChain Capital which invested in 4 different blockchain projects, the other 5 investment firms each invested in 5 different blockchain projects.



Using the available information about the investors and the total amount financed, PAData estimated the investment amount of each investor. Not taking into consideration whether an investor is a lead or following investor, PAData divided the total amount financed by the total number of investors to obtain a rough estimate. This estimate, however, may be higher than the actual amount and should only be used as a reference.

Based on such estimations, there were 16 investors who invested over $20 million in blockchain during the first half of 2020. Guy Schwarzenbach and Ribbit Capital invested the most, $103 million and $58 million respectively. Guy Schwarzenbach invested in SEBA, a Swiss crypto bank, and Ribbit Capital invested in trading platforms Robinhood and Lightning Labs.



In order to gain a better understanding of the preferences of different investors, PAData has categorized investors based on what type of institution or business they are and has shown the types of blockchain projects they invested in.

In China, four government-backed investors made investments in blockchain projects. Filenet acquired funding from the Xiong’an Investment Fund; eSand (一砂信息) acquired funding from the Shenzhen Innovation Investment Group; the Trade Finance Blockchain Platform of the People's Bank of China received special financing; and C Chain (创飞科技) acquired funding from Shanghai Nanxiang Venture Capital Investment (南翔创投).



Only 4 blockchain project investments were made by well-known traditional VCs during the first half of 2020. These blockchain project investments were made in four different areas of the blockchain industry, security, protocols, private computing, and exchanges. Unlike traditional VCs, the most preferred investment area of well-known blockchain VCs was crypto asset management. Seven blockchain VCs made 10 investments with Polychain Capital, Pantera Capital, and Blockchain.com each making 2 separate investments. Blockchain VCs also favored blockchain tools, investing in them on 5 occasions. Moreover, blockchain VCs invested in a wide variety of projects including blockchain technology, cryptocurrency, blockchain applications, and other ecosystems.

It is also worth noting that the industry’s most profitable exchanges such as Binance, BitMEX, and Coinbase all invested in other exchanges. They invested primarily in derivatives exchanges and large exchanges in emerging markets. For example, BitMEX's parent company, HDR Group, invested in Sparrow, a Singapore based options trading platform. Binance invested in Tokocrypto, Indonesia’s leading licensed cryptocurrency trading platform. Coinbase Ventures invested in CoinDCX, India’s cryptocurrency exchange. The industry’s most profitable exchanges also invested in other crypto trading related projects such as data, crypto asset management, and DeFi projects.