Early Blockchain Projects Are Starting to Scale

Recent VC-driven financing rounds within the blockchain industry indicate that an increasing number of companies are reaching important milestones and that company growth is gaining momentum.

Signature Ventures
Signature Ventures Blog
5 min readFeb 20, 2020


Photo by pixpoetry on Unsplash

Written by Manuel Trojovsky, Principal at Signature Ventures, February 2020

This piece was originally published as editorial of the chainEurope Newsletter #11. chainEurope was founded in Dec. 2017 by Florian Huber, Partner Signature Ventures, with the aim of connecting the European blockchain community.

The year has gotten off to an impressive start for blockchain startups, with a number of Series A and Series B rounds making headlines. Isreal-based Clear raised a $13m Series A led by Fidelity and venture arms of Deutsche Telekom and Telefónica. US lending platform BlockFi, which registered a 20x revenue growth in 2019, raised $30m in a Series B from global tech and blockchain VCs. Meanwhile, Samsung and Salesforce joined Digital Asset’s $35m Series C round. In Asia, a number of blockchain VCs invested $28m in Hong Kong-based crypto finance firm Amber, to name just a few.

These funding rounds indicate that the companies in question reached important milestones and have now entered a critical phase. Broadly speaking, Series A or later stage rounds are a bullish signal for the blockchain industry as a whole given that investors from both traditional VCs and corporate venture investors take a more optimistic view on the sector by committing a significant amount of funds.

While defining a startup’s stage is a matter of debate, transitioning from a seed-stage to a Series A stage company is a big step. It also suggests that investors are convinced that a company is capable of scaling. For blockchain startups, however, scaling is particularly challenging given that these companies set out to build solutions far beyond incremental improvements to existing ones. Instead, they are focusing on disruptive technologies that will initially compete with widely adopted ones. Yet, many of the rapidly-growing blockchain companies that raised Series B rounds, especially in the field of exchanges, wallets or lending, have shown an impressive ability to scale.

While the blockchain environment remains highly dynamic, fundraising volumes have largely shifted from ICOs and SAFTs to traditional equity rounds. Blockchain projects’ funding options have thus undergone significant changes over the past two years, from funding via more liquid but highly volatile tokens with tremendous regulatory uncertainty to more traditional forms, with venture funding becoming the dominant source of funding again. Today’s venture rounds have little in common with the 2017/2018 ICO bubble which had been characterized by retail investors, unrealistic expectations, inflated valuations and immature technology. Put differently, prices got way ahead of technology. Before long, it became clear that the tech was not ready.

In the meantime, however, talented teams continued to build amazing technology on top of existing open-source blockchain projects such as Bitcoin and Ethereum — the backbone of the ecosystem. Little attention was paid to the many developers that were getting back to basics during crypto winter. While people were less distracted, it appeared as if many of the promising projects had fallen into oblivion amid a lack of media interest. That’s where venture capital firms with technical expertise in the space and a long-term, fundamental approach come into play. That said, the number of traditional VCs or corporate investors that are co-investing alongside blockchain VCs has picked up notably indicating that they’ve become more comfortable with the sector and are willing to commit funds for a longer term. Unlike in 2017/2018, they have become more confident in taking an equity stake in companies that build critical blockchain infrastructure such as wallets, exchanges, custody services, layer-two solutions or privacy features.

With an increasing number of seed-stage firms now approaching their Series A and Series B rounds, venture capital investors have a more crucial role to play. In 2019, fundraising activity saw significant momentum. This has been underlined by the impressive surge in the number of Series A rounds and beyond.

In 2019, the number of European Series A or growth rounds in the blockchain space rose by roughly 19% to 39 deals in 2019 against 33 in 2018, according to data we compiled from Crunchbase. Equally important, these deals spanned a much broader spectrum of sub-sectors compared to 2018, including startups that focus on intellectual property, legal and data analysis in the crypto space. New investors which have hitherto shunned crypto or have been moderately successful at best in developing in-house blockchains solutions, such as traditional or corporate venture firms, are dipping their toes into the space.

Notable European equity funding rounds included UK-based Elliptic which upsized its Series B this month to $28m after participation from Wells Fargo Strategic Capital. The round had been led by SBI Holdings while Santander’s InnoVentures also invested. French-based ACINQ raised a $8m Series A from Idinvest Partners and Bpifrance. German-based Upvest which builds a tokenization platform for financial assets raised a $7.8m Series A from investors. Also, Switzerland-based crypto wallet provider BRD raised $15m from SBI Holdings.

Across the pond, Visa participated in the $40m Series B round raised by Anchorage, a US crypto custody firm for institutional clients. ErisX, a crypto exchange, raised another $20m in Series B funding from investors such as Nasdaq Ventures, Cboe Global Markets and a number of blockchain venture funds. Elsewhere, the Yale and Harvard Endowments have also made blockchain venture bets, either through investments in crypto funds or via direct investments in startups.

It appears that 2020 continues exactly where 2019 left off amid a slew of recent deals.

Looking ahead, we remain constructive on a fairly large number of seed-stage startups progressing to their Series A rounds while plenty of innovative companies in the Series A stage will be able to raise their Series B rounds. We project fundraising rounds to surpass 2019 volumes, fuelled by a large number of promising seed-stage projects, new investors appearing on the scene, a better understanding of blockchain tech in general, the benign Bitcoin backdrop and more clarity on the regulatory side. As for the latter, policymakers and regulators have finally gotten closer to a more uniform stance and are now moving forward with regulation and a willingness to remove the proverbial wrench from the works.