More companies merge and buy in Asia, Europe, and Africa than in the Americas. Companies are seeking opportunities in industries like mining and blockchain development.
During 2019, there was a significant decrease in the number of funds destined for the acquisition, merging, and financing of companies specializing in blockchain. The same happened with the amount and value of the fundraising rounds, according to the firm PwC.
The Second Global Report on Cryptocurrencies and Fundraising indicates that, during 2019, there were 114 purchase or merger agreements for these companies for a value of USD 451 million. Previously, in 2018, there were 189 agreements for a total of USD 1.9 billion. This now shows a decrease of 40% in the number of agreements and 76% in terms of their value.
Regarding fundraising rounds, during 2018, there were 662 rounds for a value of USD 3.8 billion, representing a decrease of 18%. Meanwhile, in 2019, there were a total of 540 fundraising rounds worldwide.
Besides, there is a greater concentration of financing from companies specializing in cryptocurrencies and blockchain in the Asia-Pacific (APAC), Europe, Middle East, and Africa (EMAC) regions than in the Americas, according to a trend identified by the firm.
The EMAC and APAC regions geographically account for 51% of all business fundraising and acquisitions in 2019. During the same period, the Americas contributed 48% of these commercial movements around the agreements reached. However, in 2019, the American continent saw this trend reversed for the first time since it dropped to less than 50%.
Previously, in 2018, the Americas gathered 55% of investments in the sector, which shows a notable decrease in contrast to other regions, a trend that has continued in 2020. The study indicates that, during 2018, emerging companies raised 71% of the funds, while in 2019 they received 59% of the total funds and others with more experience increased their financing funds.
Bithumb and Ripple Received the Most Financing
The top three fundraisers of 2019 in the area of cryptocurrencies and blockchain are Robinhood (USD 300,000), Ripple (USD 200,000), and Bithumb (200,000). Other companies such as Thundercore (USD 50,000) and Blockchain Capital (USD 200,000) are next in the list. Five of the ten financing agreements in the USA are to develop wallets or digital payment platforms.
The top three mergers or acquisitions in the sector of 2019 are due to Crypto Facilities (which Kraken acquired for USD 100,000), Coins.ph (Go-Jek, USD 70,000), and the Argentine exchange Xapo (Coinbase, USD 55 million). Immediately, in fourth place is CoinGeek, which Square Mining acquired for USD 45 M.
Another trend is that in 2018 most financing funds were destined for projects that work around the development of blockchain infrastructure. That year, investment and fundraising in the sector tripled, compared to the previous year.
Even though regulation is a point of interest, companies could also want to invest in the mining sector to diversify their portfolio and interests. Likewise, they may be interested in investing in mass media, research agencies, and consulting.
The crisis that the coronavirus caused worldwide has similar consequences for companies specializing in blockchain. This could also affect the fundraising, mergers, and acquisitions of companies in the area. However, this crisis may lead the main players in the ecosystem to acquire smaller companies.
Finally, PwC claims to be able to help companies that invest in the cryptocurrency area in many ways. It would assist in their operations, strategic planning, and compliance with cryptocurrency tax laws.
By Willmen Blanco