Consensys Sacra Teardown

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Consensys: The venture studio for Ethereum-based crypto projects 

Bringing the benefits of blockchain to the enterprise

Enterprise Blockchain Solutions

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 A deep dive into Consensys's revenue, product, competition, TAM expansion, and risks.
 
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 <ul>
 <li>
 
 Consensys is a venture studio for Ethereum-based crypto projects, founded by Ethereum co-founder Joseph Lubin in 2015. The company focuses on incubating new crypto companies and helping Fortune 500 companies build private blockchains.
 
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 As of March 2023, Consensys had an estimated USD 252 million in annual recurring revenue (ARR). However, this declined in 2023 as crypto wallet downloads fell 32% in the year's first nine months.&nbsp;
 
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 A significant portion of Consensys's revenue comes from MetaMask's swap fees, which grew 2,300% throughout 2021, from USD 1.8 million in January to USD 44 million in December.
 
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 <li>
 
 Consensys' core products include MetaMask (a crypto wallet) and Infura (crypto developer APIs). MetaMask has become the default crypto wallet across DeFi, with an 80%&ndash;90% market share of Web3 users and over 30 million monthly users. Infura, which provides APIs for crypto developers, grew from 100,000 to 430,000 developers between 2021 and April 2022. As of April 2022, Infura was processing over USD 1 trillion in annualized transaction volume.
 
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 The company's valuation reached USD 7 billion in 2023, having raised USD 726.7 million in funding as of that year. Consensys faces competition from other blockchain platforms like Solana and API providers such as Alchemy.&nbsp;
 
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 </ul>
 
 
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Consensys: The venture studio for Ethereum-based crypto projects

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 <ul>
 <li>
 
 Overall funding volumes increased from a surge in mega deals
 
 </li>
 <li>
 
 Continued adoption of AI-powered products witnessed across multiple industries
 
 </li>
 <li>
 
 Enhancing products and strengthening market presence were key motives for M&amp;A deal-making
 
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 </ul>
 
 
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 This Edge Insight focuses on notable activities related to the sectors covered by SPEEDA Edge under the FinTech vertical from April 2024 to June 2024 (Q2 2024): FinTech: Banking &amp; Infrastructure, FinTech: Blockchain, FinTech: Payments, Wealth Tech &amp; Sustainable Finance, and InsurTech.
 
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 <h1>
 Key takeaways
 </h1>
 <ul>
 <li>
 <h3>
 Regulations
 </h3>
 <ul>
 <li>
 
 Buy now, pay later (BNPL) providers to face similar regulatory scrutiny as credit card issuers: 
 During the quarter, regulatory updates have primarily targeted BNPL
 providers
 due to the increasing consumer adoption of such offerings. The 
 <a href="https://sp-edge.com/updates/29696">
 US Consumer Financial Protection Bureau
 </a>
 (CFPB) and the 
 <a href="https://sp-edge.com/updates/30179">
 Australian Government
 </a>
 introduced new laws 
 tightening oversight to levels similar for credit card issuers
 . These regulations are expected to 
 enhance consumer confidence
 in BNPL by ensuring 
 better protection 
 and further 
 accelerating their adoption.
 Meanwhile, in the 
 cryptocurrency 
 and
 digital assets space
 , the US House of Representatives passed legislation 
 governing digital assets and
 
 preventing CBDC issuance 
 by the Federal Reserve without authorization.
 
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 </ul>
 </li>
 </ul>
 
 
 <ul>
 <li>
 <h3>
 Funding
 </h3>
 <ul>
 <li>
 
 Overall funding volumes increased from a surge in mega deals: 
 The FinTech sector experienced an increase in funding volumes in Q2 2024, marking 
 three consecutive quarters
 of growth. The sector raised 
 USD 6.2 billion
 , representing a 
 90% YoY
 and 
 18%
 
 QoQ
 increase. This was fueled by a higher count of 
 mega deals 
 completed during the quarter (20 compared to 9 in Q2 2023)&mdash;particularly within 
 Neobanks
 , which accounted for 
 six
 such deals&mdash;collectively raising nearly 
 USD 4.6 billion 
 (~74%) of the total funds raised during the quarter. 
 <a href="https://sp-edge.com/companies/1343919">
 Abound
 </a>
 , a UK-based digital lender, raised the highest amount, 
 totaling 
 <a href="https://sp-edge.com/updates/31021">
 GBP 800 million
 </a>
 (~USD 1 billion)
 in Series B equity and debt funding, with the funds earmarked to expand its lending portfolio and launch its AI-powered credit decision-making platform.
 
 </li>
 </ul>
 </li>
 </ul>
 
 
 <ul>
 <li>
 <h3>
 Product updates
 </h3>
 <ul>
 <li>
 
 Integration of AI capabilities and diversification of business lines across industries: 
 During Q2 2024, we counted 11 product updates (vs. 10 in Q1 2024) related to AI. These AI product launches were prominent in 
 Business Expense Management
 , 
 Capital Markets Tech
 , and 
 InsurTech: Infrastructure
 , helping customers optimize and automate their operations and enhance their offerings. Incorporating AI across the value chain 
 is becoming a key priority for FinTech companies,
 with investments in this area only expected to increase. Other product launches focused on 
 complementing existing offerings
 ,
 entering new markets
 , and 
 diversifying operations
 , such as 
 <a href="https://sp-edge.com/companies/677824">
 Mercury
 </a>
 venturing into personal banking and pet insurer 
 <a href="https://sp-edge.com/companies/2244080">
 Kanguro
 </a>
 entering the renters&rsquo; insurance market. 
 
 </li>
 </ul>
 </li>
 </ul>
 
 
 <ul>
 <li>
 <h3>
 Partnerships
 </h3>
 <ul>
 <li>
 
 Launching complementary products and enhancing existing product portfolios drove partnership activity:
 Partnership activity remained elevated during the quarter as FinTech companies aimed to 
 innovate
 and 
 enhance
 their product portfolios, facilitating entry into new markets. Meanwhile, 
 AI-related
 collaborations were witnessed across industries, particularly within 
 Neobanks, Capital Markets Tech, 
 and
 InsurTech: Infrastructure.
 Incumbents, in particular, saw a surge in partnership activity, up 72% QoQ, accounting for over 50% of all activities. 
 <a href="https://sp-edge.com/companies/13283">
 Mastercard
 </a>
 stood out during this period, leveraging its infrastructure, including open-banking solutions, through partnerships with FinTech companies to introduce new products and extend market reach.
 
 </li>
 </ul>
 </li>
 </ul>
 
 
 <ul>
 <li>
 <h3>
 M&amp;A
 </h3>
 <ul>
 <li>
 
 Enhancing products and strengthening market presence were key motives for M&amp;A deal-making: 
 We counted 
 22 M&amp;A transactions
 within the FinTech sector in Q2 2024 (vs. 15 in Q1 2024). Most were centered around 
 enhancing existing product offerings
 and 
 strengthening their market presence 
 by acquiring companies that provide complementary services. The most valuable deal was 
 <a href="https://sp-edge.com/companies/151258">
 AlphaSense&rsquo;s
 </a>
 acquisition of 
 <a href="https://www.tegus.com/blog/alphasense-to-join-forces-with-tegus-increases-latest-valuation-to-4b">
 Tegus
 </a>
 for USD 930 million; the integration of offerings sought to provide customers with improved insights into capital markets and strengthen AlphaSense&rsquo;s position against industry giants like Bloomberg.
 
 </li>
 </ul>
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 </ul>
 
 
 <ul>
 <li>
 <h3>
 Outlook
 </h3>
 <ul>
 <li>
 
 Adoption of AI and GenAI technologies is expected to continue as companies seek to improve efficiencies and gain competitive advantage: 
 As 
 <a href="https://sp-edge.com/industry/163">
 GenAI applications
 </a>
 continue to disrupt the market, the FinTech sector is poised for significant integration of this technology, including AI. Recent product launches and partnerships have heavily focused on enhancing the FinTech infrastructure layer. We anticipate that more FinTech companies will integrate these products into internal workflows and customer-facing operations to improve efficiency, enhance services, and better serve customers. Immediate applications of these technologies are expected to include developing chatbots to gain insights from proprietary and customer data and improve customer service. Companies are ramping up investments in these areas, as indicated by a 
 <a href="https://kpmg.com/kpmg-us/content/dam/kpmg/pdf/2023/the-gen-ai-advantages-in-financial-services.pdf">
 survey
 </a>
 where over 40% of financial service executives anticipate a more than 50% increase in GenAI investments.&nbsp;
 
 </li>
 <li>
 
 Funding volumes to gradually recover in 2024: 
 Funding volumes have increased consistently in Q1 and Q2 2024, and this momentum is expected to continue throughout 2024. This growth is driven by expectations of a 25-basis-point rate cut in 2024, which is anticipated to act as a catalyst for funding across the FinTech industry. Additionally, startups are expected to seek more funding to expand operations as their cash reserves diminish following efforts to conserve funds. Focus on operating efficiency and profitability will also increase, as VC funding will likely favor companies that score high.
 
 </li>
 <li>
 
 Startups to focus on IPO readiness: 
 Following a sluggish 2023 for FinTech IPOs&mdash;characterized by reduced valuations&mdash;many startups and investors are now eyeing public listing as market conditions improve, especially with the expected relaxation of monetary policy, which can have a tailwind effect on valuations. Companies such as 
 <a href="https://sp-edge.com/updates/27565">
 eToro
 </a>
 , 
 <a href="https://sp-edge.com/updates/27044">
 Klarna
 </a>
 , 
 <a href="https://sp-edge.com/updates/27295">
 Monzo
 </a>
 , 
 <a href="https://sp-edge.com/updates/27220">
 WeBull
 </a>
 , and 
 <a href="https://sp-edge.com/updates/27702">
 Zilch
 </a>
 have announced plans to go public within 12&ndash;24 months. Moreover, an increase in M&amp;A activities within the sector is likely driven by investors seeking opportunities in distressed assets or companies looking to consolidate market share.
 
 </li>
 </ul>
 </li>
 </ul>
 
 
</div>

FinTech (Q2 2024): Mega deals accelerate funding recovery; AI-related product launches take center stage

Cryptocurrencies

<div>
 
 This report explores the demand drivers of both wholesale and retail CBDC, the motivations and technologies underlying them, and their diverse applications. It delves into wholesale CBDC at a global level and into retail CBDC with a strong focus on China, owing to the higher use cases in China compared to other countries worldwide.
 
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<div>
 
 1
 . Two forms of central bank digital currency
 : Central Bank Digital Currency (CBDC) is a digital representation of a country's fiat currency issued by a central bank (CB) to serve as a legal tender. CBDC can be categorised into two types based on usage&mdash;wholesale and retail&mdash;according to the Bank for International Settlements (BIS). 
 
 
 2. 
 Need to slash costs while heightening efficiency and security in cross-border wholesale transactions: 
 The common objective of wholesale transactions is to facilitate large-scale transactions and settlements among financial institutions. Compared to the existing alternatives, wholesale CBDC is more effective, promising real-time cross-border payments, cost savings, regulatory adherence, and anti-money laundering compliance.
 
 
 3. 
 Blockchain Technology and digital identity verification enable CBDC Development: 
 The development of CBDCs was possible due to the leveraging of key technologies that were not entirely new but adapted to suit the unique requirements of CBDC development. 
 
 
 4. 
 Governments&rsquo; financial and economic goals underpin push for retail CBDC: 
 Governments drive the creation of retail CBDCs to achieve financial and economic objectives. These digital currencies address economic instability, curb illicit activities, enable targeted monetary policies, and ensure public access to CB money amid decreasing physical cash usage. 
 
 
 5. 
 CBDCs face challenges relating to technical glitches: 
 Notable examples include issue is the occurrence of technical glitches in standalone CBDC apps, as reported by customers of 
 <a href="https://www.ub-speeda.com/company/companyinformation/cid/SPD1ZD1SLYXOQLZE?5">
 HDFC Bank
 </a>
 (IND), 
 <a href="https://www.ub-speeda.com/company/companyinformation/cid/SPD22N26UXYC2N5O?7">
 ICICI Bank
 </a>
 (IND), 
 <a href="https://www.ub-speeda.com/company/companyinformation/cid/SPD3RF51VLPSQLY7?9">
 Yes Bank
 </a>
 (IND), 
 <a href="https://www.ub-speeda.com/company/companyinformation/cid/SPD2LIZ3DWZDP59Y?11">
 Bank of Baroda
 </a>
 (IND), and 
 <a href="https://www.ub-speeda.com/company/companyinformation/cid/SPD21N82LIVP9TBM?13">
 IDFC First Bank
 </a>
 (IND) during the retail digital rupee pilot in April 2023. 
 
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Central Bank Digital Currency (CBDC)

<div>
 <ul>
 <li>
 
 Blockchains are unlocking new opportunities for enterprises. They help eliminate data silos from disconnected supply chains and securely handle sensitive data. 
 
 </li>
 <li>
 
 Many enterprises are seeing the value of this technology and coming together via consortiums to fast-track adoption.
 
 </li>
 <li>
 
 This insight explores the enterprise blockchain industry in terms of use cases, player landscape, and driving factors.&nbsp;
 
 </li>
 </ul>
 
 
</div>

EDGE Insights

Consensys: The venture studio for Ethereum-based crypto projects

FinTech (Q2 2024): Mega deals accelerate funding recovery; AI-related product launches take center stage

Central Bank Digital Currency (CBDC)

Enterprise blockchains: From Bitcoin to business

Enterprise Blockchain Solutions

Consensys: The venture studio for Ethereum-based crypto projects

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