Crypto M&A and Fundraising Dropped Sharply in 2019: PwC Report

The value of crypto M&A deals last year dropped by a whopping 76 percent, according to a new report by PwC – down from $1.9 billion in 2018 to $451 million in 2019.

Apr 6, 2020 at 1:00 a.m. UTC
Updated Sep 14, 2021 at 8:25 a.m. UTC

Crypto companies kept buying each other last year even as both M&A and funding deal flow in the industry took a dive, according to a report released Monday by PwC.

On the M&A side, crypto-native acquirers took 56 percent of the deal flow, compared to 42 percent in 2018. The total number of M&A deals flagged by the report dropped from 189 in 2018 to 114 last year, while the value of M&A deals dropped by a whopping 76 percent from $1.9 billion to $451 million.

Larger companies were able to eat up ones that provided services that were ancillary to their own, PwC Global Crypto Lead Henri Arslanian told CoinDesk in an interview.

“I think we should expect some of the big players to get bigger, but not by buying direct competitors,” Arslanian said. “Not by becoming vertically bigger but by becoming horizontally bigger. Unicorns are becoming more like octopuses where they have their hands in various areas of the crypto ecosystem.”

Meanwhile, the declines on the fundraising side of the report weren’t quite as stark. Post-seed rounds took up eight percentage points more of overall fundraising deals in 2019, a sign of the sector’s maturation.

“I think that’s something we should expect to see as well, as the industry matures, there will be enough deal flow and there will be enough exits as well to allow many of the crypto VCs to be successful,” he said.

Fundraising overall decreased by 40 percent to $2.24 billion and the number of deals dropped by 122. Equity fundraising decreased by less, showing only an 18 percent drop. The rise of bitcoin in the second and third quarter of 2019 didn’t stave off the funding drop, and the industry should assume going into 2020 that the global economic downturn will further affect funding deals, the report said.

CoinDesk - Unknown

Takeaways from the second edition of PwC's Global Crypto M&A and Fundraising Report.

Last year did see a doubling of corporate venture capital involvement, taking up 6 percent of the deals. As clear regulatory frameworks in Europe and Asia begin to develop, more institutional players are taking notice. Family offices with long-term investment strategies that Arslanian advises continue to show more interest in crypto over time, he said.

The type of companies receiving investment also changed year-to-year. In 2018, most VC funding went to blockchain infrastructure projects while crypto compliance and regulatory companies saw the most investment in 2019.

Deal flow is also moving away from the Americas and towards Asia and Europe, which increased their deal share by eight and six percentage points, respectively. Last year was the first year most of the crypto fundraising and M&A deals happened outside of the U.S.

Companies looking for new institutional clients are flocking to Hong Kong while firms looking for a retail audience are considering Singapore’s new regulatory framework, Arslanian added.

“We’ve definitely seen a number of the large players from the U.S. and from Europe really look at Asia not only from an expansion perspective but also as a point of fundraising from strategic investors,” he said.

Read the full report below:

The Festival for the Decentralized World
Thursday - Sunday, June 9-12, 2022
Austin, Texas
Save a Seat Now

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Trending

1
CoinDesk - Unknown
Market Wrap: Cryptos Decline Amid Choppy Trading, DeFi Underperforms

Risk-off conditions remain intact as volatility returns to stocks and cryptos.

Risk-off conditions remain intact as volatility returns to stocks and cryptos.

CoinDesk - Unknown
2
CoinDesk - Unknown
Travis Kling on Why a Decentralized Web 3 is Worth Fighting for

Plus more about Ikigai's new Web 3 venture fund.

Plus more about Ikigai's new Web 3 venture fund.

CoinDesk - Unknown
3
CoinDesk - Unknown
Las criptomonedas deberían cumplir con las mismas normas que las finanzas regulares, dice el G7

Los ministros de Economía y Finanzas quieren que la estabilidad financiera y los estándares de lavado de dinero entren en vigencia pronto, considerando la reciente agitación del mercado.

Los ministros de Economía y Finanzas quieren que la estabilidad financiera y los estándares de lavado de dinero entren en vigencia pronto, considerando la reciente agitación del mercado.

CoinDesk - Unknown
4
CoinDesk - Unknown
First a Hum and Then a Bang –Niagara Falls Residents Forced to Reckon With Crypto Mining

The city in New York has imposed a moratorium on new bitcoin mining operations as complaints about noise were compounded by an explosion and fire at a mining site last week.

The city in New York has imposed a moratorium on new bitcoin mining operations as complaints about noise were compounded by an explosion and fire at a mining site last week.

CoinDesk - Unknown