2019 Blockchain Industry Investment and Financing Report

In 2019, there were a total of 653 blockchain-related financing events globally, with a total financing amount close to 4.7 billion USD (, approximately 32.9 billion RMB ). In addition, there were 35 public mergers and acquisitions in 2019, with a total merger and acquisition amount exceeding 3 billion USD. It should be noted that this report only counts publicly disclosed financing information and does not include financing forms such as IPOs, IEOs, ICOs, and STOs.

Annual Financing Overview

In 2019, there were a total of 653 financing events in the global Blockchain industry, with the frequency of financing generally showing a fluctuating upward trend. From February to August, the investment market for Blockchain projects saw a recovery in heat, with a significant stepwise increase in the number of financing events. The financing activities in July and August increased notably, with a cumulative total of 146 events over the two months. In September, the investment and financing market cooled down, with a sharp drop in the number of financing events by nearly 20, a month-on-month decrease of nearly 25%. October welcomed the peak of capital activity for the year, with 84 financing events that month, accounting for nearly 13% of the total annual financing events. However, the investment and financing situation in the fourth quarter was the most unstable, as the peak financing in October could not be sustained, and the heat of the investment and financing market plummeted within two months. In December, there were only 39 investment and financing events, which was below the monthly average of 54.4 events in 2019.

In the second half of 2019, the market heat clearly increased, with financing events growing by 135 compared to the first half, a month-on-month increase of over 50%. It is worth mentioning that the sentiment in the blockchain investment market in 2019 was closely related to the Bitcoin market trend and the regulatory policies of various governments. The periods of more active financing events coincided relatively with the rise of Bitcoin prices that year, albeit with a slight lag; a large amount of capital entered the market between July and August, significantly boosting investor confidence in the industry, which continued to influence October; in the second half of the year, global regulation of the crypto space became stricter, especially with the highly watched stablecoin projects facing setbacks. Countries held an open attitude towards blockchain technology but generally expressed skepticism and a strong regulatory stance towards cryptocurrency-related businesses. The "digital asset" sector, represented by exchanges, faced consecutive blows, leading to more rational and cautious activities from investors in the fourth quarter.

In terms of amount, in 2019, global blockchain financing events raised a total of 4.7 billion USD, with an average of 477 million USD per month. Among them, the total financing amount in October was the highest, at 977 million USD, accounting for 21% of the total annual financing amount, with an average of 11.62 million USD raised by 84 projects that month. In February, June, July, October, and December of 2019, the total monthly financing amount exceeded 400 million USD. The lowest point of annual financing occurred in May, with a total financing amount of only 179 million USD, which is less than half of the average. Overall, except for the peak months, the total monthly financing amount has remained stable with a slight downward trend, which also indicates that the amount of single investments by investment institutions is decreasing.

Financing Round Analysis

From the distribution of financing amounts, aside from financing events that did not disclose specific amounts, there are 27 projects in the tens of thousands of dollars range, 64 projects in the million to ten million dollars range, and very few projects over one hundred million dollars in financing. The overall financing scale of enterprises in the industry is relatively small.

Among the only 10 projects worth over one hundred million dollars, except for a strategic investment of 1.961 billion RMB obtained by an information service provider, the remaining 9 are all related to digital assets or financial application scenarios. The more representative ones are digital currency exchanges and financial payment services. In February, an exchange received an investment of 100 million dollars, and in October, another exchange received an infusion of 50,000 bitcoins, which ranks first in the disclosed projects in terms of financing amount, although this financing news has also been questioned. In terms of payments, an Indian payment giant received investments of 101 million dollars and 4.05 billion rupees in July and October respectively. In addition, two payment companies also received investments of 100 million dollars and 200 million dollars in the second half of the year. It is worth noting that in mid-2019, substantial capital favored the financial payment sector, with payment applications accounting for one-third of the 9 financing events worth over one hundred million dollars.

Except for projects and strategic financing stages that have not disclosed their financing phases, seed/angel rounds account for 26% with 308 instances, ranking first among all financing stages. Series A financing totaled 102 instances, accounting for 15.6%, while the total number of financing events above Series B is only 61, which is less than 10% of the total financing events.

The overall situation of the financing stage in the investment and financing market within the industry often reflects issues such as the development stage and scale of the industry. As an emerging technology, Blockchain will show an "S"-shaped curve distribution in its innovation diffusion process regarding social adoption rates. From the annual increase in financing amounts, the concentration of financing rounds in early stages with little variation, and the gradual diversification of financing types towards practical applications, it can be comprehensively judged that the current industry is in the rising period of early applications, and the industry development is still unsaturated.

In addition, the dynamic trend "financing has begun to shift from the early stage before round A ( to the mid-late stage" reflects that the industry is gradually expanding its scale and maturing. In the first quarter of 2019, financing rounds were concentrated in the early stage, with a significant gap in rounds B and above, but this situation has been changing over time. In the first quarter, financing rounds were focused on events in round A and below, but by the fourth quarter, the financing rounds began to develop discretely toward the mid-late stage, with a significant decrease in the ratio of quantities between rounds, while the distribution of rounds tended to balance, and the phenomenon of gaps gradually reduced.

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Industry Track Analysis

Exchanges are undoubtedly the winning track of 2019, with the number of financing events in this track accounting for 60% of the total, dividing approximately 40% of the total financing amount.

Based on the development changes in the blockchain industry, the expansion of the entire industry has led to the development of a large number of new ecosystems and scenarios. This report introduces a new industry classification standard, which is divided into five primary categories: underlying platforms & infrastructure, digital assets, financial application scenarios, physical application scenarios, and industry services, with more than 60 secondary classifications underneath.

From the first-level classification, it can be seen that, excluding unknown classification items, events in the digital asset section account for 33% of the total, reaching 214 cases. In addition, physical application scenarios rank second, with a total of 147 cases. In fact, financial application scenarios and physical application scenarios both represent the implementation of scenarios, with a cumulative total of 219 cases, which is comparable to the volume of digital assets. This is related to the recent entry of large institutions and significant capital into the blockchain market.

Among them, exchanges accounted for 60% of the number of events in this category, representing 20% of the total financing events, making it the category with the highest frequency of financing that year. In the exchange segment alone, the funds raised in 2019 amounted to approximately $2.22 billion, accounting for about 40% of the total financing amount for that year.

In addition to exchanges, solutions/technical support in underlying technology, public chains; information and news in industry services; games in physical application scenarios; and payments in financial applications can all account for more than 5% of the total financing frequency.

The distinction between various segments within the digital asset category and the underlying platform field is quite evident. On one hand, these two major categories have been developing for a relatively long time and are more mature, and competition and elimination within the industry have already begun.

In mid-2019, the preference for financing types transitioned from digital asset categories to industry application categories. On one hand, this is related to the development stage of the industry itself; on the other hand, regulatory agencies in various countries tightened their regulation of digital assets in 2019, with China as a representative, where after October 2019, multiple heavy-handed measures targeted digital currency trading, which may lead the hot track of digital exchanges into a financing winter.

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Regional Distribution Analysis

From a regional distribution perspective, North America, Asia, and Europe have become relatively active areas for investment activities. The Americas, led by the United States, saw a total of 181 financing events in 2019, accounting for 27.7% of the global total, with investment covering all industries. In the Eurasian continent, blockchain-related projects in 11 countries received investment, with international distribution being more dispersed. Among them, the UK ranked first in Europe with 22 financing events.

In the Asia region, China, Japan, South Korea, India, Singapore, and other places have built their own blockchain ecosystems with good economic infrastructure. In 2019, China ), including Hong Kong, Macau, and Taiwan (, cumulatively conducted 191 blockchain-related investment events, Japan had 3, South Korea 9, India 19, and Singapore 47.

It is worth mentioning that markets such as India, Vietnam, and Brazil are accelerating the experimental application of Blockchain-related industries due to advantages like their demographic dividend and favorable policy environments, in hopes of achieving a leapfrog in the new round of technological revolution.

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China's Regional Distribution

Due to the domestic ban on digital trading activities such as "ICO", the preference for financing types differs slightly from the global overall trend, with domestic industry investment leaning towards underlying technology and industry applications. Especially since October 2019, when Blockchain rose to a national strategy, industry applications led and guided by the government have begun to flourish.

The Chinese blockchain industry is mainly concentrated in four major blockchain industrial clusters: the Bohai Rim, the Yangtze River Delta, the Guangdong-Hong Kong-Macao Greater Bay Area, and the Hunan-Guizhou-Chongqing region. These areas often have a solid industrial foundation, abundant talent advantages, and multifaceted policy dividends. In 2019, there were a total of 191 blockchain-related financing events in China, with a cumulative financing amount of 1.152 billion USD. In terms of investment and financing enthusiasm across different regions, the Bohai Rim, centered around Beijing, was more favored by investors in mid-2019, attracting a total of 96 financing projects throughout the year, with 93 projects in Beijing alone, attracting over 370 million USD in investment, leading the country.

In terms of cities, Beijing stands out the most. On one hand, the types of financing in this area are diverse, covering everything from underlying technology to industry development and application landing; on the other hand, the total financing amount in the Beijing region is not only the highest, but also has a higher proportion of large financing events.

The Guangdong-Hong Kong-Macao Greater Bay Area's performance is second only to Beijing, with the Hong Kong-Shenzhen duo standing out. The Greater Bay Area has made 30 cumulative investments, with total inflows exceeding 100 million USD. In 2019, the Guangdong-Hong Kong-Macao Greater Bay Area took numerous actions in terms of regulation, policy, and more. Among them, the Hong Kong Securities and Futures Commission issued a series of regulatory measures that year to pave the way for the blockchain industry, including the announcement of regulatory details for virtual asset trading platforms; Shenzhen was positioned by the central government as a "testing ground" for digital currency.

Compared to the two regions of the Bohai Rim and the Guangdong-Hong Kong-Macao Greater Bay Area, the Yangtze River Delta region has the weakest attraction effect, with Shanghai, Zhejiang, Jiangsu, and Anhui collectively raising funds 31 times, among which Shanghai had 16 times, Zhejiang 13 times, Jiangsu 2 times, and Anhui had 0.

It is worth mentioning that Hainan has also had 10 financing events this year.

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