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ICO data: Blockchain M&A deals off to a great start in 2019!

 

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With a bearish market tendency still prevailing over the crypto space, everyone involved is anxious to know ‘if the bulls will make a sweeping comeback’? Although recent developments in the space don’t provide compelling evidence for this statement, it does suggest the market is consolidating which could bring some much-needed stability to the crypto space. We haven’t hit the half-year mark and yet, major companies have coalesced into multimillion-dollar agreements.

 

Why are M&A deals significant?


From incrementing profits and customer base to decrementing competition and overhead expenses, mergers and acquisitions have countless benefits. It’s easy to get carried away by the incredible growth acomplished by blockchain and crypto over the past decade, so much so, that sometimes it's forgotten that the market is still in the nascent stage. The entire market cap of cryptocurrencies is currently $130 billion, which barely holds up to the comparison with the $6.4 trillion assets under management of Investment company Blackrock.



Will M&A activity ascend?


As with any burgeoning space that exhibits incredible promise, the M&A activity in the crypto space has been consistently higher each year. M&A activity in the space has rationally increased year-on-year, with the highest recorded growth being in 85% in 2018. In 2019, 18 M&A deals have been observed so far, which is impressive considering the market is still recuperating from its dramatic downfall last year. So the answer to the question is yes, not only will M&A activity ascend but also hold through 2019 with large capital-based deals.


# of M&A deals, year wise

 

STO database

Source

 

Trading and Investing, the big guns


Among the various sectors in the crypto market space, Trading and Investing sector leads the crew in M&A activity, with 42 deals being observed to date which is akin to an impressive 14% of all M&A activity. Trading and investing sector is closely followed by collateral sectors such as Financial Services and Fintech with 38 and 21 deals respectively.

 

Surprisingly, Financial Services sector which leads the market in terms of funds of raised ($2.8 billion raised to date) and by number of ICOs (1191), came second in terms of M&A activity. This could indicate that the Trading and Investing sector is stabilizing at a faster pace than other sectors. The top three sectors combined contribute as much as 32% of all M&A activity in the space, indicating these sectors are evolving faster than other industry sectors like e-Commerce or Education, which observed just one deal each.

 

Visa and Mastercard's battle for Earthport

 

The past few months have seen a constant war between Visa and Mastercard to acquire Earthport. Earthport is partnered with Ripple Labs, a platform that enables real-time payments across borders in different currencies in the blockchain space.

After Visa bid $226 million to acquire Earthport, Mastercard swept in to up the bid with $305 million. The deal was almost confirmed when soon enough, Visa increased their initial bid to $320 million.

No announcement or press release confirms the winner of this bidding game but it is clear that Earthport is the real winner in this tribulation.

 

Coinsquare’s acquisition of StellarX

 

Canada based crypto trading platform, Coinsquare recently acquired StellarX, a decentralized peer-to-peer marketplace based on the Stellar network with global fiat gateways and has no transaction fees.

Coinsquare plans on leveraging Stellar’s cutting-edge technology to reinforce their own platform.

This news came about exactly a year after Coinsquare managed to raise as much as $28 million in private funding from Canaccord Genuity group as part of a series B round. The crypto exchange had raised $13 million in 2017 through two funding rounds, out of which $5 million was raised solely from the seed funding round.

The firm also acquired BlockEQ, a stellar based crypto wallet, in December 2018 for  $9 million.

It looks like Coinsquare is drawn to Stellar, as of now.

 

Kraken’s blockbuster deal in 2019



Among the numerous M&A deals to take place in 2019, the news of Kraken’s acquisition of UK based Crypto Facilities has blown up in the space and this is why: Firstly, although the exact valuation of the deal hasn’t been disclosed, Kraken revealed in an official press release that it acquired Crypto Facilities in a nine-figure deal which implies it was definitely north of a $100 million. Secondly, this deal is the latest in a profusion of acquisitions made by crypto startups.

In hindsight, Kraken has already acquired five blockchain and crypto companies like, the trading and portfolio tracking platform Cryptowatch, digital wallet-funding service Glidera, and three bitcoin exchanges, Coinsetter, Cavirtex, and CleverCoin.

These acquisitions are likely to enhance Kraken’s platform, to help cater to a growing number of customer base interested in dipping their toes into the crypto space.


Exchanges will likely make a slew of acquisitions  


Exchanges are swiftly gaining more acclaim as there is an exemplary shift in people’s perspective towards cryptocurrencies and Blockchain. They have been taken seriously by established Financial institutions and governments alike, which has opened the floodgates to retail investors that are looking to invest in cryptocurrencies.

Trading and Exchange platforms like Coinbase, Kraken, and Binance are behaving as a bridge between the fiat and crypto realms. Newbies that are entering the crypto space prefer investing in crypto using fiat currencies. This trend gives scope to Exchanges to strategically acquire blockchain startups that could either give their own platform a vantage over the competition or enhance their platform for user-friendliness.


Tech giants pervading into blockchain and crypto

 

This year could also pose to be extremely important considering the tech giants have begun exploring options in crypto and blockchain. This has become clear due to a recent acquision made by one of the tech giants.
Social media behemoth Facebook recently acqui-hired a majority of the employees of blockchain research company Chainspace. This UK based blockchain startup was founded by researchers at University College of London. The startup aims to develop the blockchain technology further, enough to rival current financial systems.
They are also exploring use-cases for technology beyond the financial ecosystem.

Last year Facebook also revealed that they planned to introduce their own stablecoin and integrate it into the WhatsApp Messenger platform. This expansion, according to Facebook, is to target the Indian remittances market which is valued at a whopping $69 billion.

Although Facebook is taking this move seriously, it is hardly the only Tech giant entering the space. Amazon and Microsoft also recently revealed their own cloud-based blockchain platforms that enable enterprises to configure their own blockchain network. Industry veteran IBM has also had a significant contribution to the crypto and blockchain space with the development of Hyperledger Fabric.  


Why 2019 could be the revolutionary year for M&A deals


The entrance of leading tech companies such as Amazon and Microsoft to the space could encourage more companies to start integrating the technology in their ecosystems. It could take years of R&D for an established company to catch up with the latest technology such as blockchain and then integrate it into their ecosystems. An easier and much quicker way for them is to acquire leading companies in the blockchain and crypto space and integrate their intellectual property or use their platforms.

To top this off, more retail investors will hop onto the crypto bandwagon. Due to the borderless nature of the crypto space, exchanges will likely have to cater to a truly global audience, on par with tech giants like Google.

These developments could either make or break the global acceptance of the crypto space, which means 2019 could be a decisive year for blockchain and crypto.

 

Read more about the developments in February in our Monthly Report: February 2019 edition.

You can also specifically read about the private funding activities in our Monthly Private Funding Report: February 2019 edition.