CVVC’s H1 2019 report shows the Crypto Valley is back on track. Valuations have increased across the board, two new unicorns have emerged, and crypto banking and custody solution providers are on the rise.
Every quarter, Crypto Valley Venture Capital (CVVC) publishes its “Crypto Valley Top 50 Report” in collaboration with PwC Strategy and IT partner inacta.
The recently released H1 2019 figures show that the ecosystem has grown. The top 50 blockchain companies have doubled their valuations within the first six months of 2019 from $20 billion to $40 billion and the industry now counts more than 800 companies that employ more than 4,000 professionals combined.
Hotspots of the Crypto Valley: Zug, Liechtenstein, Zurich, Geneva, Ticino, and Vaud
CVVC maintains an online map that shows where the crypto startups are located. According to this map, Zug remains the heart of the Crypto Valley with more than 50% of all registered companies being based there.
Moreover, all of Crypto Valley’s six unicorns – companies valued at more than $1 billion – are located in Zug. The other hotspots of the Crypto Valley are Liechtenstein, Zurich, Geneva, Ticino, and Vaud.
Other reports don’t always include Liechtenstein as part of the Crypto Valley and limit the geography to Switzerland only. CVVC’s report, however, considers Liechtenstein as part of the Crypto Valley – which makes sense, looking at the strong connections between Liechtenstein- and Switzerland-based companies.
Crypto winter has left its mark, but growth has returned to the Crypto Valley
The report provides an optimistic outlook, which is not surprising considering the recent upward trend in cryptocurrency markets. Mathias Ruch, Founder and CEO of CV VC, says, “Crypto Winter undoubtedly left a mark on the industry, but companies with strong fundamentals and emerging use cases have significantly increased valuations.”
In Q4 2018, the fall of cryptocurrency prices saw the average market valuation of the 50 largest blockchain companies in Switzerland and Liechtenstein plunge from $44 billion to $20 billion. In H1 2019, valuations have almost fully recovered and were back at $40 million.
While in 2018, there were four unicorns in the Crypto Valley – Ethereum, Cardano, Dfinity and Bitmain – the new report had two additions to the list: Cosmos Network and Polkadot. Both are protocols and valued at more than US$ 1 billion each.
While the valuation and the number of blockchain companies have increased, Ruch is also right in stating that the crypto winter as “left a mark on the industry.” Declining valuations and reductions in staff have caused some of the Top 50 companies to drop out. Melonport handed its project over to the community, Shapeshift closed their office in Switzerland, and Tend ceased operations.
Crypto banking and custody providers are on the rise
The report also finds a significant increase in crypto banking activities. Well-funded prospective Swiss Crypto Banks accounted for the highest employee growth across the blockchain industry and attracted talent from the traditional banking sector.
Dr. Daniel Diemers from PwC Strategy explains, “This development clearly signals increasing maturity in the space and the favorable regulatory and business environment we have here in Switzerland. But this is just the beginning: As the market infrastructure levels up, we will see more and bigger projects develop and grow in the Crypto Valley.”
Likewise, the amount of crypto custody providers has increased. Five out of the nine newcomers to the Top 50 Report are related to the wallet & vault sector: Algo Trader AG, Cysec Systems AG, Custodigit AG, Metaco SA, and Taurus Group SA. Bitcoin Suisse (Swiss Crypto Vault), Crypto Finance (Crypto Storage) have also set up subsidiaries providing custody solutions.