UK Blockchain Companies Shift Focus to Equity Funding
Since 2008, nearly 3000 new Blockchain companies have emerged in the UK, signaling a growing interest in the technology. However, a significant shift has been observed in the funding landscape, with a move towards equity finance over initial coin offerings (ICOs).
Transition from ICOs to Equity Funding
Research conducted by MMC Ventures revealed that only 9% of UK Blockchain companies were funded by investors in the first decade, with the majority relying on ICOs for capital. The decline in the popularity of ICOs can be attributed to the volatile nature of the crypto market and the prevalence of scams within the ICO space. As a result, companies are now turning to equity finance as a more stable and reliable funding source.
The report, titled Crypto Winter or Crypto Spring? Reasons to be Optimistic on the UK’s Blockchain Ecosystem, highlighted that between January 2017 and December 2019, UK Blockchain companies raised £1.2bn through ICOs, compared to £525m raised through equity financing. This shift indicates a growing emphasis on building sustainable businesses with a focus on long-term value creation.
Focus on Fundamentals
Asen Kostadinov, the author of the report, emphasized the importance of deploying resources efficiently and targeting fundamental aspects of the technology stack. He noted that while capital may be less abundant post-ICO bubble, companies are now focusing on building robust foundations for their Blockchain projects.
Kostadinov stated, “The growing adoption of ‘live’ Blockchain solutions signifies a maturation of the technology. Unlike the internet, which took decades to become business-ready, Blockchain has achieved this milestone in a much shorter timeframe. At MMC Ventures, we remain committed to supporting entrepreneurs driving innovation in Blockchain technology and believe that its applications in enterprise settings will have a transformative impact in the years to come.”
Industry Adoption and Use Cases
Alongside the financial services sector, supply chain management has emerged as a key use case for Blockchain technology in the UK. Additionally, the media and advertising sector has witnessed a growing interest in Blockchain, particularly for digital asset management and micropayments.
Overall, the shift towards equity funding signifies a maturation of the UK Blockchain ecosystem, with a greater focus on sustainable growth and value creation. As Blockchain continues to evolve, it is expected to play a pivotal role in transforming various industries and driving innovation in the business landscape.