By Ben Ashkenazi
The
start of April was one that brought about increased clarity for the digital
asset's ecosystem. Having heard the rumours of the UK government’s interest in
regulating cryptocurrencies, it was not until April 4th that Rishi
Sunak, Chancellor of the Exchequer, announced plans to transform the UK into a
‘global hub’ for digital assets. The announcement was heavily worded around the regulation
of stablecoins, digital assets pegged to the price of the designated FX
currency, and presented an intention to explore making them a valid form of
currency. Heavily dependent on effective regulation, the Treasury’s intention
to become involved in this growing industry will likely provide the confidence
which has yet to be put in place for seasoned investors to deposit their money
into the alternative asset. If you’d like to mark the event, the announcement
will also be marked by an NFT project by the Royal Mint to celebrate the UK’s
openness to digital assets. When discussing regulation, it’s also important to
understand the discourse surrounding it, and no place is more important than
Twitter for conversation in crypto. Famously purchased
by Elon Musk at the end of the month for $44b the serial entrepreneur has highlighted
plans to make Twitter a truly public and open platform, having said “Free
speech is the bedrock of a functioning democracy, and Twitter is the digital
town square where matters vital to the future of humanity are debated”. Having
announced the plans to make Twitter an open platform, Musk also intends to
increase the users and revenues for Twitter to take advantage of the growth it
has lacked in the last 5 years.
Raises & Funding
Although
a positive start in regulation, the ventures space has seen a large slowdown in
investments compared to the trends of the last 2 years. With many blaming
obscene valuations and the cheap cost of sourcing capital as the drivers, April
has seen global VC funding slightly dip. According to leading financial data
aggregator Crunchbase, Global
venture funding in April 2022 was the lowest amount invested in private companies in
the past 12 months, falling 10% month over month from the previous month. At Armstrong, our DNA for the last 32
years has been in the financial services space, having built a business placing
buy-side operators, it'd go amiss for us to not report on the space. As we
continue to do so in crypto, it’d be irresponsible to not include some of the
month’s biggest raises. One of the most exciting raises in April was courtesy
of the leading exchange platform, Blockchain.com, which recently hit
a $14b valuation in their Series D, led by Lightspeed Ventures. Following their
valuation, rumours
of an IPO coming later this year started to swirl around. As a UK-based
cryptocurrency start-up, the firm is showing just how alive the tech scene in
the UK is. It’s also worth mentioning that Blockchain.com is known for very
strict compliance in the countries they operate. With bastions of excellence
such as Blockchain.com working alongside the efforts to regulate previously
mentioned, the UK has everything necessary to become a digital assets hub.
Another eye-watering raise was performed by the parent company of the Layer 1
infrastructure provider Avalanche, Ava
Labs, who raised $350m at a valuation of $5.25b. Since the launch of the
Avalanche network in September 2020, it has quickly become one of the most
popular blockchains, with an ecosystem of 450+ projects, and a market cap
surpassing $21b. If anything, these enormous valuations would make it seem that
raises are not going anywhere, and that is partly true. While the rest of the
venture's ecosystem suffered the toughest month in a year, blockchain
startups seem to be showing immunity to the reset in valuations, having continuously
climbed since the start of 2020. The following months will be a great case
study on whether crypto start-ups continue to deviate from the industry
standard, or if they begin to converge.
Talent
In
alignment with the continued trend in valuations and ventures in crypto, we
have continued to see hiring across the board in the digital assets space.
Andreesen Horowitz is largely regarded as one of the shrewdest operators within
the crypto venture's ecosystem, and their announcement of a new cryptocurrency
research team was
one that excited many. Research in crypto has taken on multiple meanings, with
some funds like Sequoia focusing heavily on computer science, data, and
on-chain analytics for their carefully tailored research approach, while others
such as Tiger Global focusing much less on research, rather backing the major
raisers across multiple rounds. A16Z’s newest research project seems to skew
more towards the Sequoia model having hired Tim Roughgarden, an ex-computer
science professor at Stanford and Columbia, to lead the new crypto research
team. Additionally, Dan Boneh, another ex-Stanford computer science will be
joining him. With Tim’s strength in Game Theory, and Dan’s studies of Applied
Cryptography, A16Z has employed some of the greatest minds from the world’s
leading institutions to continue their push in the ecosystem. Finally, to close
off full-circle, Christine
Moy, who was mentioned in our March newsletter following her departure from JP Morgan’s Onyx
team, has announced that she
will be joining Apollo, one of the leading alternative asset managers in the world.
Here at Armstrong, we continue to work on roles building out the future of the
UK’s digital asset industry and we would like to extend Tim, Dan, Christine,
and all professional’s seeking employment in the digital assets a warm welcome
and a helping hand for any market insights you may be looking for.
