PwC Reports Huge Shift in M&A and Fundraising from US to Asia and EMEA in 2019
In 2019, crypto fundraising and M&As began migrating over to Asia, Europe and the Middle East and saw a lack of new VC investments as the majority of funding came from crypto firms within the industry, according to PwC’s latest report released on April 6.
Crypto fundraising and M&A moving to Asia and EMEA
As outlined in the report, the majority of global crypto fundraising and M&A deals in 2019 took place outside of the United States with increased activity in both APAC (29%) and EMEA (22%) recorded.
In 2019, it was found that traditional VCs, crypto-focused VCs and family offices represented the majority source of new funding, with a share of 57%, for crypto companies. These new findings mean that crypto firms now represent the majority of M&A in the sector which is an increase compared to 2018’s 42%.
Arslanian said, “We expect to see APAC and EMEA play a bigger role in the global crypto fundraising and M&A space. In particular, we expect to see more APAC and EMEA based family offices looking at the market turbulence as a good time to invest in promising crypto companies.”
In total, the number of M&A deals recorded in the report dropped from 189 in 2018 to 114 in 2019, while the actual value of M&A deals plummeted by 76 percent from nearly two billion dollars to just under half a billion. Arslanian commented, “The crypto industry is not immune to the global headwinds and the number and value of crypto fundraising and M&A deals may be impacted in 2020.”
Top 5 Investor Deals in 2019 Compared to 2018
Per the report, while 2018 saw traditional VCs andincubators among the top investors, 2019 saw a contrast with the majority of funding provided by crypto-focused incumbents like Coinbase and ConsenSys.
Source: 2nd Global Crypto M&A and Fundraising Report
Crypto Companies Offer Complimentary Services to their Core business
Whilst 2018 saw a lot of crypto fundraising in blockchain infrastructure projects or M&A in the crypto mining space, 2019 saw a rise in investments in solutions for the crypto ecosystem like compliance and regulation; as well as M&A activity in the crypto service providers.
“We expect to see further consolidation in 2020 with some of the larger or more profitable players acquire firms that offer ancillary services to their current offering in areas like crypto media, research or even compliance,” said Arslanian.
PwC’s Global Crypto Team
These latest insights come from PwC’s Global Crypto Team which has continued to lead research in the space since its inception. Henri Arslanian discussed the ever-growing role of his team in interview with Blockchain.News in January.
In the last 2 years, PwC has conducted over 320 crypto engagements globally, spanning across 15 different countries. “I think it’s very exciting to see how PwC is getting involved in the crypto ecosystem,” said Arslanian. “Our purpose is to build trust in society and solve important problems and there is a big need for that in the crypto and blockchain ecosystem. We set up this PwC crypto team almost three years ago as the crypto ecosystem was growing, to support crypto firms not only on areas like strategy or fundraising but also on day-to-day functions such as crypto accounting, tax or KYC/AML reviews.” Arslanian believes that firms like PwC are essential for the ecosystem to “go from 1.0 to 2.0,” and “that PwC has a big role to play.”