Today LeadBlock Partners, the venture capital firm focused on European enterprise blockchain startups, published a report on the sector. In addition to discussions with twenty experts, it features a survey of 200 enterprise blockchain startups. But the findings show a cash strapped set of young companies representing an opportunity for investors and a challenge for the sector. These 200 firms alone have a need for €350 million ($395m) in the next 18 months.
Based on our own coverage, a significant proportion of promising enterprise blockchain startups are based in Europe. The report says that venture capital blockchain funds in Europe have less than €100 million ($113m) in assets under management. That compares to more than $2 billion in the U.S. with Andreessen Horowitz alone accounting for $865m.
The report mentions U.K. based startup Everledger, which is one of the funding success stories having raised $20 million nine months ago, led but China’s Tencent. Few if any of its backers are European.
While the lack of venture capital funds is a problem, many enterprise blockchain firms receive corporate venture funding, but that is not always an ideal option.
According to LeadBlock Partners, the average firm is still at seed stage, having raised €1.4 million and currently has 12 employees. Given they’ve been going for 2.5 years with an €800K burn rate, that’s not a pretty financial picture. This is an experienced bunch of founders, 87% of whom have more than ten years of professional experience.
One of the theses of the report is that blockchain, by its nature, enables ESG. It found that 76% of startups address at least one UN Sustainable Development Goal (SDG), and 28% are in the energy, food and agriculture, and healthcare sectors. These account for three of the four most popular sectors, the top one being financial services with 28%.
Technology convergence is a key driver with 70% of survey participants using at least one other technology, such as AI, machine learning and IoT. The LeadBlock survey showed the most popular technology used amongst startups – even enterprise blockchain startups – is Ethereum.