Findings of the CV VC Top 50 Report
The fourth edition of the CV VC Top 50 Report was presented at the CV Summit in Davos on January 23rd, 20120. Ralf Kubli, Director CV VC, is the author of the report and discussed the key findings with CV Post.
The Crypto Valley counts 842 Blockchain-related companies in Switzerland and Liechtenstein. How does this number compare with other hubs in the world?
Compared to other hubs, the number is very substantial, especially when considering that in our prior report, this number was over 800 already. Not only is the number of companies important, but also the actual activity and resulting presence in the market. 4400 people now work in this sector in Crypto Valley. In addition to just looking at numbers, we have to consider other critical aspects which make the Crypto Valley so attractive for entrepreneurs and established companies: The density of key projects and their technical teams, availability of talent, and a regulatory environment which provides clarity for startups and established corporations newly active in blockchain and crypto. We are not aware of other such systematic report for other hubs to evaluate company presence, employees, valuations and funding levels.
The valuation of the Top 50 companies dropped from June 30th, 2019 from $42.6B to $25.3B at the end of the year. Most of this drop is due to Ethereum losing more than 50% of its value. However, the valuation of the Top 49 excluding Ethereum, went down from $12.1B to $10.8B. Is this reduction due to lack of confidence in Crypto Valley?
I don’t think so at all. Crypto markets are very volatile and many of the Top 50 companies experience swings in their valuations. More importantly, many companies in the Top 49 were able to raise more funds thereby increasing their valuations, and some key projects, specifically in the Finance sector, saw their company valuation increase thanks to licenses granted or their operational successes.
What surprised you most in the new CV VC Top 50 report?
The second half of 2019 was a busy time for the blockchain sector in Crypto Valley. Liechtenstein almost doubled the number of firms from 42 to 80. This was surely driven by the passing of the Blockchain Act in the middle of the year.
In general, I was surprised by the increase in number of firms and employee levels. Let’s not forget that most companies in this area are startups and the technology is still very early. We can expect a significant number of companies to disappear again early in their life. It is great news that the number of new companies founded or moving to Crypto Valley was much higher than the number of recorded deaths.
“I was surprised by the increase in number of firms and employee levels.”
The report stresses the importance of the financial sector. Are the Fintech startups and the Blockchain-based financial services on their way to replace the traditional Swiss banking system?
It is clear that big bets are placed to build companies for the new blockchain based financial market infrastructure. We have to draw a distinction between crypto as an asset class and what DLT/blockchain based innovation will mean for the financial sector as a whole. When it comes to Crypto as an asset class, new players emerged to provide services, brokers and custodians are building out critical infrastructure. At the same time Challenger banks are forming to provide novel products and on-ramps to this asset class.
When it comes to innovation, we see established players, such as agile private banks seriously looking at the impact of natively issued digital financial assets on their business. This new technology will fundamentally change how business is conducted in the future. Established players make a serious mistake, if they think this DLT/blockchain thing is just another efficiency play. Creditmarkets, asset management, and risk management will function very differently in just a few years from now.
Crypto Valley counts 5 unicorns: Bitmain, Ethereum, Dfinity, Pokadot and Libra. Why Libra? And how did you calculate the valuation?
We can expect the number of Unicorns in Crypto Valley to differ from report to report due to the volatility in the markets. At the closing of this report, December 30th 2019, there were three more companies close to being valued at a billion USD, namely, Tezos, Cosmos, and Cardano.
With respect to your question on Libra. There are still more than 20 members in the association and according to their public information, each has to contribute $10M. When we look at the backing of the project, with the large number of users and capital available to build applications, Libra has to be valued as a Unicorn. Lastly, the association shows no signs of giving up on its original goal to be regulated in Switzerland and other jurisdictions.
What will be the next unicorns, and why?
The big project which is rumored to be moving to Switzerland is Telegram. With its goal to provide an entire ecosystem for its large user base including transactions and applications around its token called TON, it is definitely the project to watch.
“The big project which is rumored to be moving to Switzerland is Telegram.”
What development do you see in 2020?
First, the area to watch in 2020 is definitely real estate. A number of projects are now executing on the vision of fractional ownership and new ways to crowdfinance properties. Projects based in Crypto Valley like Crowdlitoken and Brickmark have pushed innovation on the regulatory and project financing side. Tezos, a protocol, is providing infrastructure to investment banks for tokenization and securitization of real estate in Latin America, Asia and the U.S. Emaar Suisse, a subsidiary of the large property developer in Dubai, has issued a utility token to be used for rewards in its ecosystem.
Second, I am very optimistic for 2020 with respect to the level of activity overall. If the increase of companies and activity in Liechtenstein after the passing of its Blockchain Act can be taken as an indication, Switzerland may be in for an explosion of the sector after the passing its legislation in the course of 2020.
Download of CV VC Top 50 Report
