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ConsenSys restructures, spins off venturing business


Yesterday, Ethereum development studio ConsenSys announced it is separating its core technology business from its startup venturing activities. ConsenSys Investments will be spun off with its current portfolio of companies. The reorganization will result in a loss of 14% of its headcount.

ConsenSys was founded by Joseph Lubin, who is also a founder and early financer of Ethereum. ConsenSys has seeded over 100 companies with more than $100 million in investment since 2016. Meanwhile, the software division has developed several products and tools to help developers deploy applications on Ethereum.

This is not the first time ConsenSys realigned its goals. In 2018 it cut 13% of its workforce to focus on financial sustainability. At the time, the founder said future projects would be evaluated by return on investment, social impact, and ecosystem value.

Last April, we reported that ConsenSys was seeking to raise a $200 million investment. The company was hoping for a valuation of $1 billion, with 2018 revenues of $21 million, mainly from enterprise blockchain consultancy.

At the time, we noted that the issue might be that ConsenSys was a mini conglomerate. The challenge is the software division, and the venture division would be valued differently. By separating the two businesses, ConsenSys could woo investors and raise the capital it needs.

The question is how the delineation might work. For example, ConsenSys owns a FINRA registered broker-dealer. Does that sit with the software business because it supports Codefi, or is it a venture?

At present, ConsenSys offers developers blockchain infrastructure and tools such as Infura, PegaSys and its blockchain protocol, the MetaMask wallet and Codefi digital assets, among several others. The core software business will now focus on two areas, the tools described and enterprise consulting. The target market for the tools includes Ethereum developers, decentralized finance, and startups.

On the enterprise consulting side, ConsenSys helped in the deployment of trade finance network komgo. Plus it’s involved in a luxury goods traceability initiative with LVMH.

More recently, agribusiness blockchain consortium Covantis selected ConsenSys as the lead technology partner to develop its solution on Quorum. Covantis members include some of the world’s largest agribusiness companies such as Archer Daniels Midland, Bunge, Cargill, Glencore Agriculture and Louis Dreyfus.

Meanwhile, ConsenSys Investments will continue its venturing activities. The company said it would focus on early-stage equity, liquid digital assets, and other strategic opportunities.