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Bitcoin Industry Investments Already Surpassing 2014 Total

18 Jul 2015, 00:00, ,

Investment in the Financial Technology (FinTech) sector has been heating up recently, and Bitcoin-related companies have been leading the charge.

Investments into blockchain tech companies have already exceeded the 2014 total. Venture Capital investments into the Bitcoin industry last year was approximately $350 Million US. According to Pantera VC investment group it was their latest $20 Million fundraising round, for Mining hardware producer BitFury, that pushed Bitcoin business investment above the 2014 high water mark.

This amount doesn’t include private investments nor grants, such as the $100,000 grant from the Gates foundation recently. Looking at the year on year statistics, the speed at which Bitcoin investments are growing is nothing short of top-notch, more than tripling each year so far.

According to Tomasz Tunguz, a partner at the Venture Capitalist firm Redpoint, Bitcoins annualized growth since 2012 is well ahead of space travel investments and also edges out the photo-sharing sector, which includes Pinterest.

Looking at the figures a different way, as a percentage of the total invested, the chart looks quite different. The photo-sharing group received about three times more than bitcoin, including Pinterests record-setting $425 Million VC investment last year. Against other new technologies Bitcoin appears to be holding it own. The up-and-coming Drones industry received less than half as much of the overall investments that bitcoin companies did over the past 12 months.

The largest investment in the Bitcoin industry over the last 12 months was announced in March. 21 Inc, the mysterious company that popped up earlier this year, announced that they had raised $121 Million US. The companies business plan outline a plan to target ‘the Internet of Things,’ and includes placing bitcoin mining chips into consumer electronics.

CoinBase received the second highest investment this year, back in January. At the time the record breaking $75 Million investment brought the company’s total Venture Capital funding up to $106 Million. This particular investment marked a turning point in bitcoin company financing, with investors from the New York Stock Exchange, BBVA, former Citigroup CEO Vikram Pandit, and former Thomson Reuters CEO Tom Glocer.

The third largest investment was a cool $50 Million investment round in April, for Coinbase competitor Circle. This strategic investment round was co-led by Goldman Sachs and IDG Capital Partners, solidifying the interest shown by Wall Street Street during the Coinbase funding round.

In May, Ripple Labs announced that they had raised $28 Million from a large and diverse group of investors, including data storage company Seagate, IDG Capital Partners, and the venture arm of CME Group – the world’s leading derivatives marketplace. While the Ripple platform doesn’t use Bitcoin, the blockchain based technology company is often included in the sector.

The FDIC-Insured New York Bitcoin exchange, ItBit, announced in May that it had raised $25 Million. The funds were for launching operations, as it began to accept clients. ItBit is to date the only Bitcoin Exchange licensed to operate on Wall Street, and was well prepared for the full force of the pending BitLicense that went into effect soon after the funding round.

The most recent substantial investment in a Bitcoin industry company was for BitFury. On July 9 the private bitcoin mining operation announced that it had raised $20 million, in its third round of investments. The company previously raised $20 million, and has to date received $60 million in funding since its founding in 2011.

BitFury also makes Bitcoin mining hardware, and recently released a 28-nanometer chipset. The announcement preceded a jump in the company’s share price, making it the largest mining company by valuation, although competitor KnCMiner also have 28-nanometer chips, and recently announced a 20-nanometer chip.

35 smaller investments in the industry, during the first six months of 2015, add up to the same amount of investment as seen during the whole year of 2014.

Another way to look at the likely direction of bitcoin investments is how Venture Capitalists are investing in the overall FinTech category. According to StrategyEye Digital Media, a Technology sector intelligence platform, global FinTech expenditure has risen each year this decade. 2014 saw the highest year on year increase since the days of the dot-com bubble, with $2.8 Billion invested, which is 50 percent higher than the previous year.

If 2015 is still following this trend, it is reasonable to assume that many Venture Capitalists are searching for FinTech companies to invest in.

While there may be some truth to the bearish theory that all of the major Bitcoin infrastructure companies have been well invested in already, Bitcoin is still in uncharted territory and there is no way to tell if a yet-unknown application for bitcoin will prompt a new company, or even a whole new sector, to attract another round of large investments.


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