Germany Emerges as A Blockchain Hero Amid Global Funding Decline
Berlin, Sept 13, 2023. The CV VC German Blockchain Report 2023 highlights Germany's remarkable achievements in the blockchain sector, unveiling a 3% increase in blockchain funding and an all-time high share of global funding.
Covering data from Q3 2022 to Q2 2023, the report reveals that the German blockchain sector experienced an impressive 3% year-over-year increase in funding, totaling $355 million across 34 deals. In contrast, all continents saw YoY funding declines, with a 62% decline in funding and a 44% decrease in venture deals compared to the preceding four-quarter period.
While the global landscape faced challenges, Europe reached a historic high in its share of global blockchain venture funding, surging to 26% from the 18% observed in the previous four-quarter period. Within Europe, Germany has taken center stage as a blockchain hero, highlighted by the following key findings from the CV VC German Blockchain Report 2023:
- All-Time-High Share: Germany achieved a record-high share of global blockchain funding, underscoring its growing significance in the blockchain sector. It attracted 2.4% of global blockchain funding and 2.5% of global deals, marking a substantial increase from the previous year's figures of 0.9% and 1.9%, respectively.
- European Leadership: Germany secured 9.4% of European blockchain funding and 10.3% of all European blockchain deals. This reflects its leadership within the European blockchain ecosystem.
- Focus on Blockchain: German blockchain venture funding accounted for 4% of German sector-agnostic funding and 5.5% of deals, signaling a growing focus on blockchain technology. Among Europe's seven mega blockchain deals, one was in Germany, with Matter Labs, the creators of zkSync, securing an impressive $200 million in funding.
- Majority early-stage investments: The report unveils that a substantial 72% of German blockchain investment is directed toward early-stage and seed rounds, indicating a thriving startup environment.
Impact on Established Industries: While leading German corporations like BMW, Siemens, and Zalando are already harnessing blockchain for products, services, and enhanced customer experiences, the report shows how blockchain's influence extends to other traditional German business sectors such as energy & sustainability, entertainment, and health. This shift signals a move towards digital and decentralized paradigms. Companies like Tradar (football player tokenization), Krowdz (creator economies), Greentrade (climate change mitigation), Vita DAO (health and age research), and Xylene (raw material supply monitoring) are pioneering these changes in incumbent industries.
Regional Hubs: Berlin continues to spearhead the blockchain industry in Germany, responsible for 61.8% of the total number of deals and a staggering 93% of the nation's blockchain funding. Nevertheless, other regions such as Hamburg are emerging as blockchain innovation hubs.
Sector Highlights: Investors have pivoted toward DeFi and infrastructure projects, particularly those focusing on the use of blockchain in financial market modernization, as well as projects working on interoperability and data.
DeFi: (Decentralized Finance) took center stage, accounting for 32% of investments. Notable DeFi players who received funding were M^ZERO Labs, Li.Fi, and Unstoppable Finance.
Infrastructure and developer tools received 15% of investments, a substantial increase from the previous year's 6%, indicating a solid commitment to fortify the blockchain ecosystem. Many of the newly funded projects here relate to infrastructure that bridges traditional to new, such as Februar and Spyce.5.
Identity & Data: The CV VC German Blockchain Report highlights companies at the forefront of Germany's blockchain expertise in identity and data verification. Players such as Certif-ID, Violet, Blockbrain, and Chain Patrol received funding in the past quarters. German actions in this area are not just for Web3 but for existing institutions and services.
The long-term trend of blockchain venture funding exhibited an upward trajectory: The German Blockchain Report 2023 presents its findings against the backdrop of a thorough and astute assessment of both sector-agnostic and blockchain funding from a global and European vantage point. While centered on Germany, this report efficiently compiles comprehensive global data insights. Such as highlighting that the long-term trend of blockchain venture funding as a percentage of global sector-agnostic venture funding has exhibited an upward trajectory. This percentage of funding and deals has ascended from 2.1% and 3%, respectively, in 2018 to attain a peak of 6.7% and 7.2% in Q2 2022. However, there was subsequently a decrease, settling at 3.9% for funding and 5.2% for deals during the period from Q3 2022 to Q2 2023.
The Report features insightful articles addressing key challenges, with contributions from esteemed figures such as Dr. Nina-Luisa Siedler of Möhrle Happ Luther, as well as teams from The Hashtag Association, BerChain, Berlin Partner, and other prominent voices in the field.
It exposes Germany's unique edge, pointing to Europe's evolving regulatory landscape under MiCAR, which prioritizes privacy and personal safety. This German framework is proving to be a magnet for blockchain and Web3 tech professionals and businesses. However, with the concurrent AI landscape evolving rapidly and Germany's economy teetering on a recession, incumbent players recognize the need for investments to help its champions and, indeed, the German economy stay ahead of the competition.
Ulrike Lierow-Schad, Managing Director of CV Labs Berlin, commented, "Germany has firmly established itself as a hub for blockchain advancements and could serve as a model for other regions. I encourage investors, businesses, and policymakers alike to leverage the insights provided in this report to foster the continued advancement of the blockchain ecosystem. By advancing regulations, I believe Germany can pave the way for deeper collaboration between its robust financial sector and the cutting-edge world of blockchain technology, to enhance processes, increase transparency, and drive innovation”.