Is the blockchain frenzy only happening China? How deep could be its influence all over the world? What are the things behind it that drive capital?
The enthusiasm in blockchain happened before and after China’s Spring Festival that Nature described as a plague. People may feel afraid, anxious and excited to miss this “subvert future” train. Despite that, could this group of panic and excitement be a new scam or opportunity? Could it be just fanaticism that is happening in China? How deep could be its influence all over the world? What are the forces that drive behind the capital?
In a recent publication by TechCrunch, a US technology venture capitalist, there are some explanations. According to their report, at the start of 2018, there were almost 130 venture capital investments in the global blockchain area that amount to nearly $400 million. It was more than 40% of 2017’s highest figure. From February 2017 to February 2018, the venture capital mainly concentrated in several countries that include the United States that accounted for 38% of the total. It may be relatively loose in the regulatory environment and turned into a hotbed for blockchain ventures in Switzerland, Malaysia, the United States, Japan, and Singapore. Because of China’s relatively harsh regulatory environment, it made a group of gold diggers in Hong Kong and Singapore leave.
In the past 14 months, Crunchbase counts as the most active venture capital investors in the blockchain field. It includes both venture capital accelerators and mainstream investment institutions as well as the private equity agencies that focus on the blockchain investments. The simple inventory of China Investment Group’s investment status may assist us in understanding the distribution of the blockchain field’s global capital.
Digital currency group (DCG): the most active investment institution in the global blockchain field.
The blockchain investment company DCG is first in the activity ranking. It is also a start-up business incubator. People who invested behind this company includes media platforms, traditional manufacturing companies and financial giants like Western Union, MasterCard, New York Life Insurance Company, Canadian Imperial Bank of Commerce, Chicago Mercantile Exchange Group, Pan American Ventures, Prudential Group, Foxconn, among others. According to DCG’s official website information, they already invested in more than ninety companies related to the blockchain.
Barry Silbert was the founder of DCG last 2015. He won the first pot of gold in 2011 for holding Bitcoin. In the year 2012, Barry founded the Bitcoin Opportunity Corporation to conduct angel investment in Bitcoin-related fields. Last 2013, he invested as an angel in three start-up companies namely Ripple, Bitpay, and Coinbase. In 2014, he was able to establish the blockchain-related companies like Grayscale, Bitcoin Trust and Genesis Global Trading.
Aside from the related payment applications and digital currency, the business of DCG now extended to the blockchain technology’s other stages that include the Internet of Things, finance, and smart contracts. It has investment businesses that span the globe including Surftc, Bitpagos, Bitoasis, and Bitpesa. They provide digital currency payment and transfer services to Latin America, East Africa, and the Middle East. Bitcoin China is a US-based Bitcoin exchange that is a smart contract platform with a base in Mexico.
These are some of the representative companies in its investment companies: Ripple, Blockstream, Skuchain, and Elliptic. Ripple is a company that utilizes blockchain technology to connect banking systems. Blockstream is a Blockchain protocol. Skuchain provides blockchain solutions for supply chain financing and B2B trade. Elliptic makes use of the blockchain as well as other technologies so they can monitor blockchain illegal trading companies. It has a primary service that targets law enforcement agencies, exchanges, and financial institutions.
The venture capital company that venture capitalist Bart Stephens and Chairman of the Board of Bitcoin Foundation founded is Blockchain Capital. As of the moment, the company invested in more than 68 companies, but 4 of them already withdrew.
As of the moment, the company has four funds that include the $13 million second-phase fund Blockchain Capital FUND II that they raised last January 2016, the October 2017 fundraising, and the $50 million Fund Blockchain Capital III Digital Venture Fund last March 2017. They were able to raise 59.72 million dollars in the fourth fund Blockchain Capital IV.
By the third-phase fund, they obtained $40 million of the $50 million raised through traditional financing methods. They earned the remaining $10 million through Ethereum’s intelligence contract issue tokens. According to the Blockchain Capital, they are doing this to explore the future model of private equity. It may take investors who invest in traditional VCs five to ten years to quit. The tokens may allow the holders to sell their fund ownership anytime for greater liquidity.
After raising the fund’s second phase, Angel Ventures and the blockchain capital that invested in venture capital agencies like LinkedIn and PayPal created the AngelList Group. As of the moment, the portfolio of blockchain Capital includes bitcoin remittance applications like blockchain technology startups such as Wave, the blockchain technology company Blockstream, Abra, Ripple and Bitcoin Coinbase.
Plug and Play of the Technology Venture Accelerator
There was a small building at 165 University Street in Palo Alto California that people called the “lucky place” of Silicon Valley. It was once the first location of technology giants like PayPal and Google. The landlord is the famous incubator of Silicon Valley called Plug and Play. Since 1998, Plug and Play was able to incubate, accumulate and invest in more than 6 thousand start-up companies that include star technologies companies like Logitech, Dropbox, Lending Club, Google and PayPal that currently has a market value of more than ten billion US dollars.
The Iranian Saeed Amidi is the CEO and co-founder of Plug and Play. Aside from his “sideline business” of Plug and Play, he also has the bottled water company called the Amidi Group that has the annual revenue of more than $150 million.
Last 2006, Amidi created the incubation accelerator of Plug and Play. With the direction of its screening companies that includes insurance technology, mobile travel, financial technology and the Internet of Things, Plug and Play now established incubating centers in more than thirty countries. They put up Plug and Play in China last October 2016.
Since September 2016, Plug and Play was able to create some blockchain companies that includes Netki, an authentication startup company, Nuco, a blockchain infrastructure company and Tierion, a blockchain data collection company that provides to small and medium-sized importers and exporters. They also created the blockchain application Stellar, blockchain identification company Tradle, blockchain platform Eximchain, blockchain identity management company Shocard, among others.
One of the funds in the venture capital system that the Silicon Valley venture capital godfather called Tim Draper owns is Draper Venture Network. Aside from Draper Associates, that is the Most Cattle Investor in the Silicon Valley, Draper also co-founded the Draper Dragon Fund, an international blockchain fund, and the DFJ investment fund. He previously invested in star companies like Baidu, Skype, Hotmail, SpaceX, and Tesla.
In 1959, the family of Draper established the first venture capital company on the West Coast. Since then, they launched the innovation engine of the Silicon Valley. William Henry Draper III, his father, founded Tim Draper’s DeVega Investment Fund and the Sutter Hill Ventures that manages the capital of more than $2 billion.
According to the information from Crunchbase, last April 2016, Draper Associates were able to complete the fifth phase of their $190 million fundraising. As of the moment, the investment agency was able to invest in 200 companies. Twenty-nine of these are lead projects, and thirty-one of them already withdrew. The investments of Draper Associates in the blockchain area includes the participation in Bitpesa’s $2.5 million Series A round of financing, Ledger’s $75 million Series B round of funding, and Coinbase’s $100 million Series D round of financing.
Distributed Capital of Fenbushi
The blockchain risk investment institution based in Shanghai is Distributed Capital. Last July 2015, Vitalik Buterin, the founder of Ethereum, Xiao Feng, the founder of the Bo Shi Fund, and Shen Bo, a doctor of economics at Nankai University co-founded the institution. However, there were reports from the foreign media last January 2018 that Vitalik left the distributed capital.
The Current Situation of the Distributed Capital Management Team
According to data from CrunchBase, the distributed capital is now an investment in seventeen companies. From the list of the investment companies, you may see that almost all of the companies have relation to the blockchain. Some of them have relatively large investment amounts that include the participation in the A-round financing of Symbiont that amounts to $15 million and the participation in the Circle D financing of $60 million.
Last January 2018, their recent investments include the finance technology company SMT Technologies’ angel wheel with the Wanxiang Blockchain Investment Fund.
The blockchain investment institution founded last 2015 is Node Capital. Du Jun is one of its founding partners and the protagonist of the article “Zhuangjia Du Jun” that recently caused a lot of hot debate. As per the reports, the private equity investment fund is not like the traditional private equity investment. It mainly uses a combination of legal and digital currency. According to the node official website’s introduction, they have notable projects for its investment that include golden finance, blockchain media, fire currency networks and digital currency exchanges, among others.
As per the media reports, Du Jun mainly relied on playing games so he can sell domain names and equipment in his early year. He eventually entered the vision of Kang Sheng who is an angel investor and entrepreneur that Dai Zhikang established. Tencent conceived Kang Shen as a wholly-owned acquisition last 2010. Du Sheng eventually followed with Tencent. By the second half of 2013, Du Jun resigned from Tencent so he, Li Lin and the others can put up the Digital Currency Exchange Firecoin Network. With HuoNet, Dai Zhikang became an angel investor. After more than a year with Firecoin Internet, Du Jun withdrew from HuoNgGou’s management. He established the node capital and founded the blockchain token money media golden finance.
As of the moment, the “coin circle” of Du Jun’s industrial chain includes three major resource platforms that are digital currency exchange, vertical industry media, and private equity investment.
According to their official website, node capital now has more than 25 investment projects. These are TNB, aelf, Ink, Coin Tiger, Scry.info, TianCai, Bibox, Honeycomb, Genaro Network, Atoken, Fortuna, Read, CAN, MDT, iCube, Golden Finance. It also includes Bochen Bo Chen, Chaindigg, Primas, QunQun, Aidoc, gifto, WAX, Ku Shen, Chain Technology, LBTC, KEX, ProChain and acute angle.
Digital Finance Group
The blockchain investment agency from Shanghai is the Digital Finance Group. The organization has an affiliation with the Huiyin Blockchain Venture (HBV) that is the Bank of China Blockchain Venture Capital. The parent fun of HBV is Huiyin Group that is a Chinese private investment group that focuses on investing in traditional industries like agriculture, energy and real estate.
As per the Digital Finance Group’s official website, their founder, James Wo, is the son of the founder of the Bank of Communications Group. They publicly reported that James Wo once said that the Digital Finance Group paid particular attention and support to the Bitcoin blockchain project. As of the moment, the Digital Finance Group was able to invest in some Bitcoin companies like the Bitcoin micropayment platform SatoshiPay, the Bitcoin e-commerce platform Purse, the content monetization platform Yours, and the Indian Bitcoin Exchange Unocoin.
According to Coindesk’s report last 2016, the Bank of Communications Group announced that it initiated investment in blockchain companies for $20 million. Last February 2017, the Bank of China Group revealed that their funds were able to exceed expectations by raising $80 million. Before the B round, they will invest in blockchain companies. As of the moment, the company was able to spend in about twenty blockchain-related companies that include the Ledger X’s $11.4 million round B financing last May 2017.
Andreessen Horowitz of the Anderson Horowitz Ventures
One of Silicon Valley’s most famous venture capital companies is the Anderson Horowitz Venture Capital (“AH”). Since 2013, the agency entered the field of cryptocurrency and became regarded as one of the first institutional funds that were able to invest in encryption projects. The company was co-founded by former Opsware CEO Ben Horowitz and Netscape co-founder Marc Andreessen last 2009
Anderson Horowitz Venture Capital (“AH”) is one of the most popular venture capital companies in Silicon Valley. Since 2013, the agency has entered the field of cryptocurrency and is regarded as one of the earliest institutional funds to invest in encryption projects.
Their founder, Anderson, was a faithful believer in the IoT and blockchain technology. Anderson was able to publish the article entitled “Why Bitcoin Matters” in The New York Times last 2014. This article explains the importance of Bitcoin. Earlier, AH invested $50 million in Bitcoin-related startups. As of January 2016, AH was able to complete the fifth phase of their $1.5 billion fundraising.
Last 2016, AH was able to invest in a lot of companies in distributed ledgers and cryptocurrencies that include Ripple Labs, Tradeblock, Cyphercloud, OpenBazaar, GitHub, 21 Inc., Mediachain, and Coinbase. In the view of Anderson, Ethereum and Bitcoin are now in combination with the Internet of Things. They are now in use in online content monetization, smart contracts, and other areas.
The venture capital accelerator and global venture capital company are SOSV. They characterized it as the one-on-one services for businesses and entrepreneurs. Entrepreneurs and mentors live together for three months so they can help the latter develop products and look for customers. According to information from Crunchbase, there are now more than a thousand SOSV investment companies. Seven hundred and twenty-seven of them lead projects, and twenty-three already withdrew.
SOSV focuses on investments in life sciences, agricultural companies, food, and hardware. Last January 2017, SOSV was able to complete the recruitment of a $150 million third-phase fund. SOSV now has eight startup accelerators in the world that includes one in China that they call Chinaccelerator. The acceleration of China is also on the list of the global blockchain sector’s current investment institutions.
Medici Venture Capital or Medici Ventures
Founded in 2014 is Medici Ventures which is a wholly-owned subsidiary of the US Internet retail giant called Overstock.
Last October 2016, Medici Ventures was able to participate in the Series A financing of the service company Factom and the US blockchain. As of the moment, the company invested in blockchain companies that include the Belgium blockchain Startle Settle Mint, blockchain data management company Factom, Argentina Bitcoin startup Ripio, blockchain mobile voting platform Voatz, smart contract platform Symbiont, digital currency exchange Bitt, among others.