Funding to bitcoin, blockchain start-ups grows to $550 million in 2016

Investors made 132 investments in bitcoin and blockchain companies in 2016.

Bitcoin start-up funding on the rise. Photo: Pixabay

Bitcoin and blockchain technology start-ups received $550 million in funding from investors in 2016

Total funding rose just 5%, from $524M in 2015

Investors made 132 investments in bitcoin and blockchain companies

2012 saw 5 deals total $1.3M in disclosed investment

Digital Currency Group, Blockchain Capital, Tim Draper, Pantera Capital, RRE Ventures top investors

Bitcoin has continued to be sought after as an important investment tool in 2016, especially with the geo-political and economic unrest in many parts of the world. Bitcoin and blockchain technology start-ups received $550 million in funding from investors in 2016 from almost no investment in 2012, according to a CB Insights report.

While cash has continued to pour into bitcoin and blockchain companies post-2012, total funding rose just 5%, from $524M in 2015 to $550M in 2016. In 2016, investors made 132 investments in bitcoin and blockchain companies, fewer deals than in 2014, and an 18% drop from 2015′s high of 161 investments, said the report.

2012 saw 5 deals total $1.3M in disclosed investment, and was followed by two years of steep annual increases, to 143 deals and $357M invested in 2014. In 2015 it increased to 161 deals with funding of $524 million.

There were four rounds which raised above $50 million rounds in 2016. This includes Circle ($60 million, Series D), Digital Asset Holdings ($60 million, Series A), Ripple ($55 million, Series B), and Blockstream ($55 million, Series A). But 21 and Coinbase still lead in terms of largest financings, having closed $111 million and $75 million rounds, respectively, in Q1 2015.

A closer quarter to quarter look at funding of bitcoin and blockchain start-ups reveals that funding has gradually declined from $175 million in Q1 2016 to $87 million in Q4 2016.

Some of the biggest investors in bitcoin and blockchain technology start-ups include Digital Currency Group, Blockchain Capital, Tim Draper, Pantera Capital, RRE Ventures and Y Combinator.

While seed and angel funding continues to be the major contributor to these start-ups, it has declined gradually since 2013 onwards. Now seed or angel funding has declined to 54.5% in 2016 from 70.2% in 2015 and 72% in 2014.