Perhaps no market attracted as much hoopla in 2013 as bitcoin. As the price and notoriety of the digital currency skyrocketed, a host of startups have emerged offering services ranging from bitcoin wallets to global exchanges to mining machines.
Despite questions about bitcoin’s future viability, venture capital investors have been betting that the bitcoin industry is here to stay. The largest bitcoin investment to date was Coinbase’s $25M Series B round led by Andreessen Horowitz in December. A16Z co-founder Marc Andreessen brought the digital currency into the public eye writing in The New York Times that:
“Far from a mere libertarian fairy tale or a simple Silicon Valley exercise in hype, Bitcoin offers a sweeping vista of opportunity to reimagine how the financial system can and should work in the Internet era.”
As with the digital currency itself, overall venture investment into bitcoin startups is still small. In 2013, VCs put just over $74M into bitcoin companies across 40 deals. In our earlier research, we found that Q2’13 saw a jump in bitcoin deals and dollars. But after a quieter third quarter, Q4’13 saw the highest quarterly total of bitcoin financing ever at just under $50M deployed across 18 deals.
Coinbase’s notable funding round was the outlier among bitcoin deals last year, as seed-stage investments took 72% of all bitcoin deals in 2013. The average deal size in the bitcoin market for 2013 trended at $2.19M, while the median deal size to bitcoin startups stood at just $560,000.
The top 5 most well-funded bitcoin-related companies have combined to take $55M in aggregate funding and count notable investors including Union Square Ventures, Google Ventures and Accel Partners among their known venture backers.
A spreadsheet of all the bitcoin financings included in this analysis can be found on the ‘Research’ tab, after logging in to CB Insights. Note: This research is only available to paid subscribers with access to CB Insider.