The crypto ‘winter’ in deal-making and funding continued in 2019.

The 2^nd edition of PwC’s Global Crypto M&A and Fundraising Report is out. The report highlights the key trends that prevailed for crypto fundraising and M&A during 2019. (CoinDesk)

Notable trends:

Deals – counts and values

Deal counts fell across both fundraising (-18%) and M&A (-40%).

Deal values fell across both fundraising (-40%) and M&A (-76%).

Geographies

Asia and EMEA together accounted for 51% of fundraising and M&A combined in 2019, up from 44% in 2018, marking a shift out of the Americas.

This was the first year in which the majority of crypto funding and M&A deals happened beyond the U.S. and in other geographies.

PwC Global Crypto Lead Henri Arslanian told CoinDesk in an interview that firms interested in institutional business were making a beeline for Hong Kong. On the other hand, retail-oriented companies were attracted by Singapore given its new regulatory framework.

Sectors

Increasing diversification noticed in the sectors that saw investments. However, there is a noticeable trend in favor of crypto solutions and peripheral sectors.

“Whilst 2018 saw significant crypto fundraising going into blockchain infrastructure projects, we are seeing a rise of investments in crypto exchanges and solutions for the crypto ecosystem, in particular the compliance and regulatory solutions sector. This is another natural consequence of the institutionalization of the industry,” the PwC report observed.

Funding Stage

In fundraising, there was a preference for later-stage companies. Post-seed funding accounted for 23% in 2019 versus 15% in 2018. One notable feature is the rise in funding received from established corporates in 2019.

M&A trends

M&A activity was more inward-looking in 2019, with incumbent sector companies accounting for 56% of buyers versus 42% in 2018. An overwhelming number of deals (90%) were strategic in nature.

What’s in store for 2020?

• The crypto industry would be unable to escape the fallout from the deadly coronavirus. As a result, dealmaking and funding would both be impacted, the PwC report said.
• There would be further consolidation in the industry with some of the larger well-funded or profitable firms buying some of the smaller players in the market. Popular targets could be companies in ancillary services such as crypto media, compliance and research.
• APAC and EMEA would continue their new-found dominance in global crypto fundraising and M&A.

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