2018’s Bitcoin bear market hasn’t been kind to industry startups. Save for a few exceptions in Binance and BitMEX, crypto companies got slammed across the board. South Korean exchange giant Bithumb, for instance, was reported to have lost $180 million over 2018, partially as a result of a brutal hack that likely lost the platform business in large quantities.
Some companies collapsed entirely, as they failed to establish financial security as the crypto holdings lost 90%+ of their U.S. value. While others, like ShapeShift and Bitmain, laid off employees in the dozens.
But, after over a year of brutal price action, the market has begun to turn, and the startups affected by the so-called “crypto winter” are finally starting to return to their feet. It seems, however, that ConsenSys, an Ethereum development consortium, needs a helping hand though.
ConsenSys Looks For External Funding
According to a recent report from The Information, the New York-headquartered blockchain group, headed by Ethereum co-founder Joseph Lubin, is currently searching for a large sum of venture capital funding.
Citing “several people with knowledge of the plans,” the outlet explains that ConsenSys, which houses MetaMask, Infura, and countless other key pieces of Ethereum infrastructure, is actively seeking $200 million from “outside investors,” after operating off Lubin’s Ether stash for years on end.
While this nine-figure sum is ludicrous in and of itself, the $200 million seems even crazier when you factor in the mere $21 million the firm dragged in for fiscal 2018, and that ConsenSys is seeking a valuation of “at least $1 billion.”
This 50+ times revenue-to-market capitalization multiplier is, in the eyes of some prospective investors, “too high given the company’s revenues and expenses,” The Information writes while referencing the aforementioned sources.
Interestingly, despite the skepticism, ConsenSys, a well-recognized industry name, seems to find its ten-figure valuation entirely justified. The group’s executives have purportedly already pitched ConsenSys to investors in Hong Kong and South Korea — two crypto hotspots — and those familiar claim that even Chinese investors are considering giving the Ethereum-centric group some cash.
And with time, this could turn out to be a winning bet. Per the fundraising documents obtained by sources, ConsenSys is projecting to secure more than $50 million in revenue for fiscal 2019, 80% of which is likely to come from the firm’s services arm, which partners with corporations and governments to introduce them to blockchain technologies.
While ConsenSys evidently has its head up high now, as it projects a doubling of its revenues year-over-year, the purported search for $200 million comes after a dramatic layoff. At the end of 2018, Lubin released a letter to ConsenSys’ spokes, often Ethereum decentralized application creators and infrastructure providers, revealing that the organization was to undergo a restructuring that included a layoff of 13% of the ~1,200-odd staffers.
Ethereum Losing Steam
ConsenSys recent struggles only accentuate that Ethereum hasn’t been doing all too hot lately. And interestingly, many industry insiders expect for this unfortunate trend to continue into the future.
Earlier this year, Fred Wilson, the co-founder of crypto-friendly Union Square Ventures, took to his world-renowned blog to claim that he expects to see Ethereum’s space in this ecosystem challenged by new competitors in 2019. This quip was followed by a near-identical comment from Kyle Samani, a partner at industry investment group Multicoin Capital, shortly thereafter.
Samani specifically stated that the percentage of total developers work shift from Ethereum to newer Blockchain 3.0 platforms, such as Polkadot and Cosmos. Most recently, Tetras Capital’s Alex Sunnarborg took to Forbes to continue this narrative, claiming that the mentioned layoffs at ConsenSys, lack of users on Ethereum-based applications like Augur, and the overvaluation of certain ICOs are signs that the project is losing momentum and steam.
Yet, Vitalik Buterin, the creator of the project, has done his utmost to exude confidence in the midst of what some call “FUD.” In a recent Reddit thread, the cryptocurrency entrepreneur claimed that the Prysmatic, Lighthouse, Ethereum 2.0 (Serenity), and so on and so forth are “still continuing work right on schedule.” But is this true? At this point, no one is all too sure.
