MEET THE BLOCKCHAIN UNICORNS - MID YEAR 2022

Blockchain Coinvestors Newsletter

Vol. 4, No. 15, July 2022

MEET THE BLOCKCHAIN UNICORNS - MID YEAR 2022

Before launching into the substance of today's newsletter, we want to reiterate comments we have made in prior newsletters about the public market crisis we are living through including in crypto.

Our summary is as follows:

  • Dangerous Times. To add to the dangers of COVID, Inflation, Russia/Ukraine, and a Crypto Blizzard, we now have to add the collapse of a Korean based protocol Terra/Luna and the Singapore based hedge fund Three Arrows Capital with the knock-on impacts on their respective counterparties such as Babel, BlockFi, Celsius, and Voyager among others.

  • Impact on Investment Thesis. We see no reason to change our investment thesis - digital monies, commodities and assets remain inevitable.

  • Impact on Investment Strategy. We see no reason to change our investment strategy of focusing on early and mid stage blockchain venture opportunities - equity and tokens.

  • Conversely, our Investment Strategy has never included public liquid market trading in cryptoassets:

    • We are not traders

    • We do not focus on public liquid cryptoassets

    • We do not invest in crypto hedge funds as a core strategy

    • We do not use leverage

    • We have never participated in staking, yield management or other new and unproven strategies, and we believe that no one should until counterparty risk is well understood

    • The core of the current crypto crisis is that big bets were made by traders who did not understand the counterparty risks they were taking onboard

  • Impact on Fund Performance. Our evaluation will not be completed until we see the next quarterly reports from our fund managers, but we can say today:

    • Blockchain Coinvestors has no direct exposure to the Terra/Luna protocol or the tokens it has issued and we were not investors in Three Arrows Capital

    • Within our family of fund of funds we see 3 out of 45 funds that have more than minor direct exposure so the overall impact given our massive diversification should be slight

    • At the same time, indirect impacts on our funds and their portfolio companies and projects will take time to feed through. We have already seen some indirect impacts such as the markdown in value of BlockFi which is now in a sales process to FTX.

  • Recognize the Opportunity. The analytical evidence says that venture capitalists outperform following a downturn and the best strategy is to heavy up by investing into the downturn.

  • Stick to Best Practices of Venture Investing. We always stick to the best practices of venture investing; we don't plan to change this disciplined approach in any way as the rest of 2022 unfolds.

Bottom Line. We are excited to have capital to deploy, and plan to do so as we get greater clarity on where the best blockchain investors are placing their next round of bets. We believe the timing for investing into early stage blockchain companies and projects is ideal. 

 

We have recently recorded a webinar called Recognize the Opportunity that recaps how well positioned our funds are in this context.

 

Overview of Meet the Blockchain Unicorns Mid Year 2022

 

Yesterday we announced our Mid Year 2022 list of blockchain unicorns – private blockchain enterprises and crypto projects with valuations exceeding $1 billion. In summary:

  • Private blockchain enterprises have seen enormous value creation in the first half of 2022

  • Public liquid crypto projects have seen more than half of the tokens trading above $1bn at YE 2021 now below $1bn in market cap

  • Midyear 2022 there are 93 enterprise and 50 crypto project unicorns; Blockchain Coinvestors is invested in 62% of the former and 56% of the latter

  • There are now 26 public blockchain companies

The entire report can be downloaded by clicking here.

 

We will present the full results of our mid year findings during the upcoming “Meet the Blockchain Unicorns MY 2022” webinars on July 12, 2022 at 7:00am and 12:00pm PT. Click the links to register.

 

Blockchain Enterprise Unicorns

The number of new blockchain enterprise unicorns created in the first half 2022 is again impressive. There are now 93 private blockchain enterprise unicorns across all of the 8 blockchain investment themes that we invest into. Our fund of funds have capital exposure to 62% of these blockchain enterprises. 

 

While 28 new blockchain unicorns were created in the first half, the industry did lose a couple as the fallout of the Terra/Luna and Three Arrows crisis continued to surface. Specifically we have removed Celsius and Babel from our unicorn list.

The distribution of the blockchain enterprise unicorns closely aligns with our fund of fund allocation strategy. The greatest concentrations of the unicorns are in North America (54), followed by Australasia (19) and then Europe (10). Our target allocation is 50% North America, and roughly 25% to each of Asia and Europe. We believe we have good coverage of all of the major blockchain hubs globally.

Crypto Project Unicorns

As we have previously explained, blockchain teams have the option of either raising equity through traditional funding rounds, or by launching crypto tokens to their communities and supporters to raise their capital. When we went to press, there were 50 crypto projects with tokens trading at more than $1 billion of market value across a range of cryptocurrencies, stablecoins, crypto commodities, protocol, DeFi, and NFT platform tokens. This is a dramatic decline since our last report when there were 133 such crypto project unicorns. The  public markets have seen enormous value loss in the last six months in crypto.

Here at Blockchain Coinvestors we have capital invested in 56% of these crypto project unicorns, focused on the protocol, DeFi, and NFT platform tokens. We believe that the most attractive time to invest into crypto projects is during their  private formation and seed phases if you can add value to the project leads and if they will provide you an allocation. This is the focus of our early stage token fund strategy.

The full list of crypto project unicorns can be seen by watching our recording or by visiting CoinStats.

Public Blockchain Unicorns

In the first half of 2022 we saw a number of blockchain enterprises go public through IPOs and de-SPAC mergers. There are now 26 public blockchain companies.

Recognizethe Opportunity


As we said in our year end 2021 report on blockchain unicorns, we continue to believe that this acceleration of value creation in blockchain is driven by fundamental tailwinds which are not going to stop any time soon. The world is moving towards a global digital economy that we call the Fifth Era, and yet we can't get there without complementing today's Internet with more powerful approaches to Security, Identity, Decentralization, Digital Monies, and Digital Assets as outlined in our book, Blockchain Competitive Advantage, which is available for free.

This is where we at Blockchain Coinvestors focus our investment thesis.

Thank you for reading.

Alison Davis

Matthew C. Le Merle

ABOUT BLOCKCHAIN COINVESTORS

 

Launched in 2014, our goal is to provide broad coverage of the emerging unicorns and fastest growth blockchain companies and crypto projects. The strategy is now in its 9th year and has to date invested in more than 40 pure play blockchain venture funds in the Americas, Asia and Europe; and in a combined portfolio of 400+ blockchain and crypto projects including approximately 60% of all blockchain unicorns. Our funds rank in the top decile amongst all funds in their respective categories on both Pitchbook and Preqin. Headquartered in San Francisco with a presence in Grand Cayman, London, New York, Zug and Zurich, the alternative investment management firm was co-founded by Alison Davis and Matthew Le Merle.

FUND PERFORMANCE

 

Blockchain Coinvestors Fund III (Fund of Funds) was created to provide diverse coverage of the best blockchain pure play venture funds in the Americas, Asia, and Europe. Blockchain Coinvestors Funds I and II have already experienced significant appreciation. Fund I Net TVPI is 4.72x with an IRR of 72%. Fund II shows equally impressive early results with Net TVPI of 2.08x and an IRR of 146%. Almost all of our fund investments are performing as top quartile against the Cambridge Associates Venture Benchmark.

BLOCKCHAIN COINVESTORS FUNDS

Blockchain Coinvestors’ goals are to provide broad coverage of the emerging unicorns and fastest growth blockchain companies and to capture superior returns from investing in the leading blockchain venture partnerships. Our funds are open to investors that meet the Qualified Client definition with a minimum subscription level of $250,000 at the discretion of the Manager. 

 

  • Blockchain Coinvestors Fund III (Fund of Funds) was created to provide diverse coverage of the best blockchain pure play venture funds in the Americas, Asia, and Europe. Blockchain Coinvestors Funds I and II have already experienced significant appreciation. Fund I Net TVPI is 3.64x with an IRR of 69%. Fund II shows equally impressive early results with Net TVPI of 1.72x and an IRR of 161%. Almost all of our fund investments are performing as top quartile against the Cambridge Associates Venture Benchmark.

  • Blockchain Coinvestors Fund IV (Early Stage Token) provides direct access to promising private stage token projects accessing our relationships with many of the world’s leading blockchain investors. We leverage asymmetrical information from our 40+ VC Funds to pick the most attractive opportunities. This is a continuation of the direct token investing strategy of the Fund Manager that has included private stage investments in Acala, Filecoin, NEAR, Polkadot, Structure, and others.

  • Blockchain Coinvestors VI (Mid Stage Growth) provides direct exposure to the emerging category leaders in the blockchain and crypto ecosystem. The fund leverages our unique sustainable competitive advantage (USCA) in blockchain, web3, and fintech to create a concentrated portfolio of between 20 and 30 investments with attractive return profiles and visible paths to liquidity. The fund assesses the more than 400 blockchain and crypto projects in which we are direct and indirect investors and employs a robust investment framework to select investment opportunities into the leading mid stage growth rounds - typically Series B, C and D. This is a continuation of the mid stage investing strategy of the Fund Manager that has included investments in Bitwise, Brex, InfiniteWorld, Securitize, Uphold, Wyre, and others.

Please visit the Blockchain Coinvestors website to learn more about our offerings. You can also reach our Investor Relations team directly at ir@blockchaincoinvestors.com.

BLOCKCHAIN COINVESTORS SWISS

We are excited to announce that Blockchain Coinvestors Funds are now available through Swiss certificates for those of our non-US investors who prefer this approach. The underlying fund is the same, however, our Zurich based team at Blockchain Coinvestors Swiss, who will introduce in future weeks, can provide detailed information regarding this investment option. Email us at mlemerle@blockchaincoinvestors.com to learn more.

BLOCKCHAIN COINVESTORS ANGELLIST SYNDICATE

Continuing the theme of the democratization of investing, we have a rapidly growing Blockchain Coinvestors syndicate on AngelList providing access to selected coinvestments. Please join us and our partner Lou Kerner on AngelList.

Click here to receive the insightful weekly crypto newsletter and webinar invitations from our Blockchain Coinvestors partner Lou Kerner.

REGISTER NOW FOR UPCOMING WEBINARS AND CALLS

 

Our investment team hosts regular webinars and calls to help educate our community about the Fifth Era, fintech, blockchain and crypto. We discuss important trends, tailwinds and investment themes including what we have learned and how we are using our knowledge to inform our own investment thesis and actions. Below is a list of upcoming webinars for which you can register by clicking the links:

 

Meet the Blockchain Unicorns - Mid Year 2022

- July 12th, 7:00am PT
- July 12th, 12:00pm PT

 

Options for Investing in Blockchain & Crypto

- July 25th, 7:00am PT
- July 25th, 12:00pm PT

 

Investing in Early Stage Tokens

- August 8th, 7:00am PT
- August 8th, 12:00pm PT

 

Recordings of past webinars and calls can be found at www.blockchaincoinvestors.com/webinars.

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