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Pwc I 2Nd Global Crypto M&A and Fundraising Report

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2nd Global Crypto M&A and Fundraising Report April 2020 2 PwC I 2nd Global Crypto M&A and Fundraising Report Dear Clients and Friends, We are proud to launch the 2nd edition of our Global Crypto M&A and Fundraising Report. We hope that the market colour and insights from this report will be useful data points. We will continue to publish this report twice a year to enable you to monitor the ongoing trends in the crypto ecosystem. PwC has put together a “one stop shop” offering, focused on crypto services across our various lines of services in over 25 jurisdictions, including the most active crypto jurisdictions. Our goal is to service your needs in the best possible way leveraging the PwC network and allowing you to make your project a success. Our crypto clients include crypto exchanges, crypto investors, crypto asset managers, ICOs/IEOs/STOs/stable and asset backed tokens, traditional financial institutions entering the crypto space as well as governments, central banks, regulators and other policy makers looking at the crypto ecosystem. As part of our “one stop shop” offering, we provide an entire range of services to the crypto ecosystem including strategy, legal, regulatory, accounting, tax, governance, risk assurance, audit, cybersecurity, M&A advisory as well as capital raising. More details are available on our global crypto page as well as at the back of this report. 2nd Global Crypto M&A and Fundraising Report April 2020 PwC 2 3 PwC I 2nd Global Crypto M&A and Fundraising Report 5 Key takeaways when comparing 2018 vs 2019 There was a sharp decline in deal volume and value for crypto fundraising and M&A in 2019, and investments have been shifted towards Asia / EMEA and into more diversified sectors The crypto winter continued in 2019 for Asia and EMEA are now home to the There has been increased diversification crypto fundraising and M&A, with both the majority of crypto fundraising and M&A of the sectors encountering investment number and value of deals falling deals activity, with a clear shift towards crypto solutions and peripheral sectors Deal counts and value1 Deals by geography Deals by Sector Fundraising & M&A Fundraising & M&A combined, number of Fundraising & M&A count Value 3.8b 2.2b -40% 1.9b 0.5b -76% (US$) Fundraising Count M&A Count 662 189 -18% 851 1% 10% 19% 19% 540 654 44% 3% 2% 22% 28% 26% 22% 22% 114 3% 51% 15% 20% 19% -40% 29% Counts 662 26% 15% 28% 540 16% 17% 55% 20% 48% 189 30% 114 31% 26% 29% 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 Fundraising M&A Americas APAC EMEA N/ANA2 Solutions (Compliance and reg., Mining Payment, Wallet) Trading (Trading infra. & Crypto Other & peripherals Notes: 1) Only includes deals with disclosed data and excludes potential fraud deals; 2) Not disclosed Exchange.) (Media, Consul. & Research etc.) Source: MergerMarket, Capital IQ, Crunchbase, Pitchbook, PwC Analysis Blockchain infra. 4 PwC I 2nd Global Crypto M&A and Fundraising Report 5 Key takeaways when comparing 2018 vs 2019 The crypto industry continued to consolidate and mature in 2019, with funds going to later stage companies As the crypto industry continued to mature, fundraising The consolidation in the crypto industry continued in 2019 has trended towards later-stage companies with crypto incumbents driving most of the activity. 9 out of the top 10 deals were strategic in nature and driven by other crypto companies or crypto focused funds Equity fundraising of crypto companies M&A of crypto companies Deal count (number of) by transaction type Buyers count 662 192 8% 11% 1% 1% Post-seed 540 6% 5% 4% 3% 15% 5% 7% 7% 2% 7% Post-seed 16% 6% 23% 114 10% 8% 1% 11% 18% 3% 4% 2% 11% 16% 71% 59% 42% 56% 2018 2019 2018 2019 Crypto /Blockchain Other Tech Others Crypto focused Seed NA1 – Early stage Series A Series B+ companies companies and VCs & Funds Startups NA1 – Late stage NA2 Established Traditional VCs, PE and Hedge Private Corporates & incubators and funds investors3 Corporate VCs family offices Notes: 1) Specific stage was not disclosed 2) Not disclosed 3) Individuals Source: MergerMarket, Capital IQ, Crunchbase, Pitchbook, PwC Analysis Undisclosed 5 PwC I 2nd Global Crypto M&A and Fundraising Report 3 Trends to watch for in 2020 Crypto industry not immune to Further consolidation to take APAC and EMEA to continue global macro economic conditions place in 2020 playing a bigger role driven in part by family offices • The global headwinds caused by • As a consequence of the turbulences in • 2019 saw APAC and EMEA play a the Coronavirus and other related the global crypto ecosystem and as a bigger role in the global crypto M&A events are having an impact on continuation of the current trend, we and fundraising space. We expect to many industries globally, including expect to see further consolidation in see this trend to continue in 2020. the crypto industry. the industry with some of the larger well • In particular, we expect to see more • We believe that the crypto industry funded or profitable firms buying some activity from APAC and EMEA based is not immune to these conditions of the smaller players in the market. family offices looking at the market and the number and value of • We expect to see some of the larger turbulence as a good time to enter the fundraising and M&A deals may be players buy firms that offer ancillary market. impacted as a consequence in services to their current offering 2020. (e.g. crypto media, compliance, research). PwC 6 PwC I 2nd Global Crypto M&A and Fundraising Report Fundraising PwC 7 PwC I 2nd Global Crypto M&A and Fundraising Report Equity fundraising of crypto companies Equity fundraising of crypto companies Crypto Fundraising Global deal count (number of) Global deal value1, USD in bn Global Landscape The crypto winter continued -18% -40% for part of 2019, with the number of equity fundraising 3.72 deals for crypto related 662 companies decreasing by 18% 540 2019 vs 2018 and the value of 2.24 fundraising deals decreasing by 40% to US$2.24 billion. The rise in the price of Bitcoin 2018 2019 2018 2019 in Q2 and Q3 2019, and the 10.0m 10.2m 2018 2019 Average deal size associated interest in “crypto of disclosed deals:1 assets” did not yet materialise by way of increased new capital into the industry. Note: 1)Deal values include only deals with available data Source: MergerMarket, Capital IQ, Crunchbase, Pitchbook, PwC Analysis 8 PwC I 2nd Global Crypto M&A and Fundraising Report Equity fundraising of crypto companies Crypto Fundraising Deal count (number of) by geography Deal Count by 662 Geography 1% 20% 540 2% Whilst the Americas continue 22% 27% to dominate crypto fundraising activity, there was a shift 30% towards Asia and EMEA in 2019 52% 46% 2018 2019 Americas EMEA APAC Undisclosed Source: MergerMarket, Capital IQ, Crunchbase, Pitchbook, PwC Analysis 9 PwC I 2nd Global Crypto M&A and Fundraising Report Whilst 2018 saw significant crypto fundraising going in to blockchain infrastructure projects, we are seeing Crypto Fundraising a rise of investments in crypto exchanges and solutions for the crypto ecosystem, in particular the compliance Deal Count by and regulatory solutions sector. This is another natural Sector consequence of the institutionalization of the industry. Equity fundraising of crypto companies Deal count (number of) by categories 662662 19% 540540 3% 6% 22% 6% 26% 3% 13% 7% 9% 11% 28% 12% 30% 18% 13% 31% 19% 22% 15% 2018 2019 Other Mining Wallet Compliance & Reg. Payments Crypt. Exchange Trading Infra. Blockchain Infra. Solutions Trading Source: MergerMarket, Capital IQ, Crunchbase, Pitchbook, PwC Analysis 10 PwC I 2nd Global Crypto M&A and Fundraising Report Equity fundraising of crypto companies Crypto Fundraising Deal count (number of) by transaction type Deal Count by 662 Transaction Type 11% Post-seed 5% 540 3% 15% 7% 7% 2% 7% Post-seed The crypto industry continues to 6% 23% mature with post-seed funding 10% 11% becoming a larger portion of overall crypto fundraising 71% activity. 59% 2018 2019 Seed Undisclosed – Early stage Series A Series B+ Undisclosed – Late stage Undisclosed Source: MergerMarket, Capital IQ, Crunchbase, Pitchbook, PwC Analysis 11 PwC I 2nd Global Crypto M&A and Fundraising Report Traditional VCs, incubators and family offices continue Crypto Fundraising to remain the major source of funding for crypto companies. This said, there has been a rise in funding Deal Count by from established corporates in 2019, an example being Investor Type Fnality International’s fundraise that pulled 14 established banks together. Equity fundraising of crypto companies Investors by type 1,430 14% 1,208 5% 2% 11% 3% 2% 6% 5% 1% 2% 6% 15% 7% 10% 17% 24% 37% 33% 2018 2019 Traditional VCs, incubators and family offices Crypto focused VCs & Funds Private investors1 Crypto/ Blockchain companies Established Corporates & Corporate VCs Other Tech companies and Startups PE and Hedge funds Others Undisclosed Notes: 1) Individual investors Source: MergerMarket, Capital IQ, Crunchbase, Pitchbook, PwC Analysis 12 PwC I 2nd Global Crypto M&A and Fundraising Report Equity fundraising of crypto companies Top 10 Crypto Deal count (number of) by categories* Announce Amount Target Fundraising Deals Date Target Lead investor (USD in mn) Series Sector Country 07/08/18 Bitmain Crimson Ventures 715 Series B Mining China in 2018 Trading 10/05/18 Robinhood DST Global 363 Series D United States Infrastructure Tiger Global 30/10/18 Coinbase 300 Series E Wallets United States Management Trading In 2018, mining, crypto 09/08/18 tZERO GSR Capital 270 Growth United States Infrastructure exchange and infrastructure Crypto United 26/04/18 Revolut DST Global 250 Series C were the dominant sectors, Exchange Kingdom Andreessen BlockTower accounting for 6 out of the top 04/01/18 Horowitz, Union 140 Unknown Other United States Capital 10 fundraising deals… Square Ventures Trading 15/05/18 Circle Bitmain 110 Series E United States Infrastructure Blockchain 27/09/18 Seba Crypto Undisclosed 104 Unknown Switzerland Infrastructure Compliance & 18/01/18 Ledger Draper Esprit 75 Series B France Regulation 24/07/18 BlockFi Galaxy Digital LP 52.5 Unknown Other United States Note*: Based on information from online databases as well as media reports.
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