The State of Investment into Security Token Infrastructure — Q1 2020
The year of the security token kicks off strong with continued investments, large Series A rounds, and high-profile M&A deals
It’s officially Q2 and we’ve got the latest round-up of investments into Security Token Infrastructure below.
The punchline: Roughly $60,000,000+ was invested over the last 3 months with several strategic acquisitions taking place. Although this was half the size of the previous quarter, the total size was above the total average across 2019. This brings the total investment into the industry (since 2018) to $850,000,000+
Despite the economic volatility in the second half of the quarter, the start of 2020 marked an important signal for what’s to come in the industry. Not only do we see an increase in overall size and quantity of the transactions, but we are also seeing increased M&A activity and strategic investments by major heavyweights like Sony Financial and ING backing Securitize and the HQLAx platform respectively.
BlockFi and Securrency took on major 8 figure funding rounds for their Series A rounds while several exchanges took on more capital, including MERJ concluding their tokenized IPO and DSTOQ taking strategic investment from Stellar’s Foundation.
What might be most interesting of all was the M&A activity. Though no large acquisition offers were disclosed, we can infer from the targets themselves that Consensys plans to move heavily into security tokens with their new broker-dealer acquisition and all eyes are on Bitgo to see what they will do with their broker-dealer license and tokenization technology acquired from Harbor.
In conclusion, the industry continues to heat up with many existing players raising Series A financing rounds, more corporate and financial institutions are becoming investors, and M&A activity may spark more consolidation within the space in Q2. If not for the wildcard that is COVID-19, one would suspect this trendline to continue into Q2 of this year.
As always, we will continue to update this list as we find new information. Our last update was on July 3rd, 2020.
Read the Q4–2019 Market Report Here
Read the Q3–2019 Market Report Here
Issuance Platforms
BlockFi, San Francisco — $30,000,000 led by Morgan Creek and Valar Ventures (Previous financing of $78,700,000 by Galaxy Digital and ConsenSys)
Securrency, Washington D.C. — $17,650,000 led by WisdomTree (Previous financing of $15,400,000)
Agora Innovation, Germany— €750,000 led by EOSVC
Securitize, San Francisco — Undisclosed amount by Sony Financial Ventures (Previous financing of $26,000,000+ from Santander, MUFG, SBI, Coinbase, and Ripple)
Exchanges
iSTOx, Singapore — $5,000,000 investment by Hanwha (Previous financing of $4,580,000+ by Tokai Tokyo Holdings and Kiatnakin Phatra Financial Group)
MERJ*, Seychelles — $1,000,000+ tokenized IPO
DSTOQ*, Liechenstein — $715,000 investment by Stellar Development Foundation
HQLAx, Zug — Undisclosed amount by ING (Previous financing of €10,000,000 by the Deutsche Borse)
Other Infrastructure Companies
Copper, U.K. — $8,000,000 (Previous financing of $1,300,000)
ICO, Crowdfunding or FinTech Companies Also Offering STO Services**
AlphaPoint, New York — $5,600,000 investment by Galaxy Digital (Previous financing of $17,600,000)
Omniex, San Francisco — Undisclosed investment by SIX
Acquisitions
Harbor, San Francisco — Undisclosed to Bitgo
Heritage Financial Systems, Philadelphia — Undisclosed sale to Consensys
Investery, San Francisco — Undisclosed to AVA Labs
Currently fundraising category (notable mentions):
SEBA, Zug — $100,000,000
Smartlands, United Kingdom — $3,000,000+ (˜$470,000 on Seedrs and $2,000,000+ privately)
We will continue to update this list with missing information about Q1. Stay tuned and subscribe to see the Q2 report in July!
*Also does issuance.
**Not applied towards the total investment into Security Token Infrastructure due to some of the capital being invested towards non-security token infrastructure.
