30th Apr 2020

Crypto Winter or Crypto Spring? Reasons to be optimistic about the UK's blockchain ecosystem

At MMC Ventures, we are passionate about the opportunities blockchain offers. Despite volatile sentiment, our analysis of the UK blockchain ecosystem suggests the underlying activity remains healthy and is underpinned by several powerful dynamics.

Since the beginning of 2018, scepticism has been prevalent in the blockchain space. Negative press has become an almost daily occurrence (e.g. WIRED, Forbes, FT). This period of reckoning, referred to as the ‘crypto winter’, should be interpreted in a positive light — the build-up of hype across the ecosystem in 2017 has given way to a more grounded, pragmatic and business-case-first approach to product development.

Our analysis of the UK blockchain ecosystem suggests the underlying activity remains healthy. We expect an acceleration in business investment and entrepreneurial activity due to: improving capital dynamics, more efficient deployment of resources, greater focus on infrastructure development, and accelerating adoption by enterprises, partly driven by the urgent need for digitisation highlighted by the Covid-19 crisis.

“While capital may be less abundant than it was during the ICO bubble, resources are being deployed more efficiently and targeted at fundamental areas of the technology stack. The innovation occurring at the infrastructure layer over the past 18 months might not be as easy to appreciate from a distance, but it is laying the foundations for more sustainable growth in both business and consumer adoption.” Asen Kostadinov, MMC Research Manager

In our new report 'Crypto winter or Crypto spring? Reasons to be optimistic about the UK’s blockchain ecosystem' we dig deep into the UK's equity-funded blockchain startups to understands trends around adoption, funding and entrepreneurship.

Key findings include:

  • Enterprise adoption is increasing: 63% of startups with business customers unsurprisingly focus on financial services but other sectors, like media and advertising, are growing.
  • The funding landscape is maturing: More than 85% of equity funding for UK blockchain startups has occurred since 2017 with 2019 being the second strongest year for raising equity.
  • Stronger fundamentals: Since the crash in crypto prices at the beginning of 2018, entrepreneurs are adopting a business-case first approach to product building and placing greater emphasis on company fundamentals.

Download the full report here.

“At MMC Ventures, blockchain will continue to be an area of research and investment focus. We back entrepreneurs that are changing industries at the most fundamental level and we believe that applications of blockchain technology in the enterprise will have that kind of transformative impact in the coming years.” Asen Kostadinov, MMC Research Manager
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