Global Crypto M&A (Summary & Comments)

The following is a brief summary of the "Global Crypto M&A and Fundraising Report H1 2019" published by PWC in September 2019. The report covers equity investments and M&A transactions in the cryptocurrency industry, broken down by geography and sector.

Background Information

In terms of geographies, the authors chose to cover the following:
- APAC
- EMEA
- Americas

In terms of sectors, the authors chose to cover the following:
- Wallets
- Trading Infrastructure
- Payments
- Mining
- Crypto Exchange
- Compliance & Regulatory
- Blockchain Infrastructure

Note: It is somewhat unclear in the report whether "Equity Fundraising" includes convertible instruments or not.

Equity Fundraising by Geography

• Percentage of deals done in the Americas has been steadily decreasing since Q1 2018
• The percentage of deals done in the APAC region was relatively stable from Q1 2018 - Q1 2019, with sudden spike in Q2 2019 (it will be interesting to see how this trend plays out, whether the uptick in APAC deals will continue through Q3/Q4 2019)

Equity Fundraising by Sector

• Investment into exchanges is still significant, which won’t be sustainable unless there is true innovation in terms of features or tradable products.
• Crypto mining investments have all but disappeared, potentially indicating that the large, well-capitalized companies are effectively dominating the space (see comments below on M&A activity in the mining sector).
• A similar trend can be seen with investments into Wallet technology, which have dropped significantly since Q2 2018

M&A Deals by Geography

• Percentage of M&A transactions occurring in the Americas has been steadily declining since Q1 2018.
• Significant spike in M&A activity in the EMEA region in Q2 2019, should be interesting to see if this trend holds through Q3/Q4 2019.
• Although there are significant fluctuations in the M&A activity in the APAC region, the last three quarters have all shown significantly increased activity compared to Q1 2018.

M&A Deals by Sector

• The mining sector experienced a great deal of consolidation in Q1/Q2 2018, with mining M&A transactions accounting for almost half of all M&A activity in Q1 2018.
• The Compliance and Regulatory sector has seen the least M&A activity, with a few deals occurring in Q1/Q2 2018 but none since.
• The Trading Infrastructure and Crypto Exchange sectors have seen a steady stream of M&A transactions from Q1 2018 all the way through to Q2 2019.

Key Takeaways

A few of the major findings in this report:

• The crypto industry is maturing and expanding globally, as can be seen with the increase in deals being done in the Asia-Pacific and EMEA regions.
• Although the industry is maturing relatively quickly, it is still in the early stages. Almost half of all deals done in Q1 2019 were classified as “Seed” and the percentage of deals classified as “Series A” almost doubled.
• As is expected, the number of M&A transactions is consistently lower than the number of equity fundraising deals.
• Trends in geography and sector are similar between both equity fundraising deals and M&A transactions.
• The Compliance and Regulatory sector has seen the least M&A activity, with a few deals occurring in Q1/Q2 2018 but none since. This could be a result of the uncertainty associated of this sector within crypto (governments and regulators are still figuring out how to handle this new technology).

About Consilium

Consilium Crypto is a big data company that provides quantitative and qualitative insights to market participants in the digital asset space, including funds, family offices and exchanges.

Consilium analyzes 17,000 trading pairs, over 1000 assets, across 50+ exchanges, and tracks trading activity to the millisecond. Our system monitors raw transaction data, as well as complete price and liquidity information from order books around the globe. These data pipelines power our core products, designed to help funds find alpha and place large orders efficiently in times of thin liquidity.

For more information, send an email to info@consiliumcrypto.ai

DISCLAIMER: Consilium Crypto Inc. research and recommendations are meant for educational purposes only and the opinions expressed do not constitute investment advice. Independent advice should be sought where appropriate. The information in this report is provided "as is" and "as available". All information and opinions expressed herein are current as of publication and are subject to change without notice. Consilium Crypto Inc. does not warrant the accuracy of the materials provided herein, either expressly or impliedly, for any particular purpose and expressly disclaims any warranties of merchantability or fitness for a particular purpose. This document is provided for informational purposes only and should not be used for investment decisions. This is not an offer to sell or a solicitation of an offer to buy any security referenced in this document. Consilium Crypto Inc. does not provide financial or trading advice. For any questions or clarifications, please contact info@consiliumcrypto.ai.